Your Down Payment
Lots of buyers qualify for various loan programs, but they can't afford a large down payment. Below are a few methods that will help you get together a down payment
Slash the budget and build up savings. Scrutinize the budget to discover ways you can cut expenses to save for your down payment. You also could enroll in an automatic savings plan to automatically have a predetermined portion of your paycheck transferred into a savings account. You might look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or skip a family vacation.
Sell items you don't need and find a second job. Perhaps you can get an additional job and build up your earnings. In addition, you can put together an exhaustive inventory of things you can sell. Unworn gold jewelry can bring a good amount from local jewelers. You might own desirable items you can sell at an online auction, or quality household goods for a tag or garage sale. Also, you might want to think about selling any investments you own.
Borrow from your retirement funds. Explore the specifics for your individual plan. Some people get down payment money by withdrawing from their IRAs or taking funds out of 401(k) programs. Be sure to learn about the tax consequences, your obligation for repaying funds, and early withdrawal penalties.
Ask for help from generous family members. Many buyers are sometimes lucky enough to get help with their down payment assistance from thoughtful parents and other family members who are prepared to help them get into their own home. Your family members may be pleased at the chance to help you reach the milestone of buying your own home.
Research housing finance agencies. These types of agencies offer provisional mortgage programs for low and moderate-income borrowers, buyers interested in renovating a house in a particular part of the city, and additional groups as defined by each finance agency. With the help of a housing finance agency, you may get a below market interest rate, down payment assistance and other advantages. These kinds of agencies can assist you with a lower rate of interest, help with your down payment, and offer other advantages. The central purpose of not-for-profit housing finance agencies is to boost the purchase of homes in specific parts of the city.
Find out about low-down and no-down mortgage loan programs.
- Federal Housing Administration (FHA) mortgage loans
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in aiding low to moderate-income families qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgage loans.
FHA helps first-time homebuyers and others who might not be eligible for a traditional loan by themselves, by offering mortgage insurance to private lenders.
Interest rates for an FHA loan typically feature the current interest rate, while the down payment amounts for an FHA mortgage will be below those of conventional loans. Closing costs may be financed within the mortgage, while the down payment may be as low as 3 percent of the purchase price.
- VA loans
With a guarantee from the Department of Veterans Affairs, a VA loan assists service people and veterans. This specialized loan requires no down payment, has mimimal closing costs, and provides a competitive interest rate. Although the VA does not actually issue the loans, it does issue a certificate of eligibility to apply for a VA loan.
- Piggy-back loans
You can fund a down payment with a second mortgage that closes at the same time as the first. In most cases the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The borrower pays the remaining 10%, rather than needing to put together the usual 20% down payment.
- Carry-Back loans
In a "carry back" mortgage, the seller commits to loan you a portion of his own equity to help you with your down payment money. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a slightly higher interest rate with the loan from the seller.
The feeling of accomplishment will be the same, no matter which method you use to come up with the down payment. Your brand new home will be well worth it!
Want to discuss down payments? Give us a call: 718-441-7000.