Your Down Payment
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Many borrowers qualify for several different kinds of mortgages, but they can't afford a large down payment. Here are a few methods that will help you get together a down payment
Tighten your belt and save. Be on the look-out for ways to reduce your expenses to save toward a down payment. There are bank programs through which some of your take-home pay is automatically transferred into a savings account each pay period. You might look into some big expenses in your spending history that you can give up, or trim, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or skip a family vacation.
Sell items you do not need and find a part-time job. Maybe you can find a second job and build up your earnings. Additionally, you can put together an exhaustive inventory of things you may be able to sell. Unused gold jewelry can be sold at local jewelers. Multiple small items could add up to a nice sum at a garage or tag sale. You might also explore what any investments you own will bring if sold.
Borrow money from your retirement plan. Investigate the parameters of your specific program. You can pull out funds from a 401(k) plan for a down payment or withdraw from an IRA. You will need to make sure you know about any penalties, the effect this could have on taxes, and repayment terms.
Ask for help from family members. Many buyers are often lucky enough to get down payment help from thoughtful parents and other family members who may be willing to help them get into their first home. Your family members may be pleased at the chance to help you reach the milestone of owning your own home.
Contact housing finance agencies. These types of agencies provide provisional mortgage loan programs- for moderate and low income buyers, buyers with an interest in renovating a home within a particular part of the city, and other certain types of buyers as defined by each agency. With the help of a housing finance agency, you probably will receive a below market interest rate, down payment help and other benefits. These kinds of agencies may assist eligible homebuyers with a lower interest rate, get you your down payment, and provide other benefits. These non-profit programs exist to build up community in specific places.
Find out about low-down and no-down mortgages.
- FHA mortgage loans
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 individuals get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, enabling new homebuyers who will not qualify for a conventional mortgage, to get home financing. Interest rates for an FHA mortgage are usually the going interest rate, but the down payment with an FHA loan are less than those of conventional loans. The down payment can go as low as three percent while the closing costs might be financed in the mortgage loan.
- VA mortgage loans
VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which generally offers a reasonable interest rate, no down payment, and limited closing costs. Even though the VA doesn't actually issue the mortgage loans, it does certify eligibility to qualify for a VA mortgage.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes with the first. Generally the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. Instead of the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
In the case of a seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. The buyer funds most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically, this type of second mortgage will have a higher rate of interest.
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 your reward!
Need to talk about the best options for down payments? Give us a call at (919) 355-1034.