Your Down Payment
Many buyers can easily qualify for various loan programs, but they don't have a large sum of cash to pay a down payment. Here are a few tips:
Slash your budget and build up savings. Look for ways you can reduce your monthly expenditures to save toward a down payment. You also might enroll in an automatic savings plan at your bank to have a portion of your pay automatically deposited into savings. Some practical approaches to put together funds include moving into less expensive housing, and skipping a year's vacation.
Sell things you don't really need and find a second job. Perhaps you can find an additional job to get your down payment money. In addition, you can put together a comprehensive inventory of items you can sell. Unworn gold jewelry can bring a good price from local jewelry stores. A closetful of small items can add up to a fair amount at a garage or tag sale. Also, you can look into selling any investments you own.
Borrow money from your retirement plan. Check the parameters of your particular plan. It is possible to borrow funds from a 401(k) plan for you down payment or get a withdrawal from an Individual Retirement Account. Make sure you comprehend the tax ramifications, repayment terms, and possible early withdrawal penalties.
Request a gift from family. Many homebuyers somtimes get down payment help from gracious parents and other family members who are eager to help them get into their own home. Your family members may be willing to help you reach the goal of buying your own home.
Contact housing finance agencies. Provisional mortgate loan programs are given to buyers in specific situations, like low income purchasers or buyers planning to renovating houses in a targeted place, among others. With the help of a housing finance agency, you may receive an interest rate that is below market, down payment help and other advantages. Housing finance agencies can help you with a lower rate of interest, get you your down payment, and provide other benefits. These non-profit agencies were established to boost the value of homes in specific neighborhoods.
Find out about low-down and no-down mortgage loans.
- FHA mortgages
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low to moderate-income Americans qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting home financing.
FHA helps first-time buyers and others who may not be eligible for a traditional mortgage loan by themselves, by offering mortgage insurance to the private lenders.
Interest rates with an FHA loan normally feature the market interest rate, but the down payment amounts with an FHA mortgage will be lower than those of conventional loans. Closing costs may be financed within the mortgage, and your down payment could be as low as 3% of the total.
- VA mortgage loans
With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This special loan does not require a down payment, has mimimal closing costs, and provides a competitive rate of interest. Even though the mortgage loans don't originate from the VA, the department verfifies borrowers by providing eligibility certificates.
- Piggy-back loans
You may fund your down payment using a second mortgage that closes along with the first. Most of the time, the piggyback loan is for 10 percent of the home's amount, and the first mortgage finances 80 percent. Instead of the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
In a "carry back" mortgage, the seller agrees to loan you a portion of his home equity to help you get your down payment funds. The buyer finances the majority of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Typically you'll pay a somewhat higher interest rate on the loan financed by the seller.
The satisfaction will be the same, no matter which strategy you use to pull together your down payment. Your new home will be your reward!
Want to discuss down payments? Give us a call at 718-441-7000.