Your Down Payment
Lots of borrowers can qualify for a mortgage loan, but they can't afford a large down payment. Do you want to buy a new home, but aren't sure how you should get together a down payment?
Slash the budget and build up savings. Turn your budget upside-down to discover extra money to go toward your 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. You might look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a vacation.
Sell items you don't need and find a part-time job. Look for an additional job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also get serious about the possessions you really need and the items you can sell. You may have collectibles you can sell at an auction website, or household items for a tag or garage sale. Also, you can think about selling any investments you hold.
Borrow from your retirement funds. Research the specifics of your individual plan. You can take out funds from a 401(k) for a down payment or withdraw from an IRA. Be sure you know about any penalties, the way this could affect on taxes, and repayment terms.
Ask for a generous gift from family. First-time buyers somtimes get down payment help from gracious parents and other family members who may be prepared to help them get into their own home. Your family members may be pleased at the chance to help you reach the goal of buying your own home.
Contact housing finance agencies. These types of agencies provide provisional mortgate loan programs- for low and moderate-income buyers, buyers with an interest in sprucing up a house within a particular part of the city, and other certain kinds of buyers as defined by the agency. With the help of a housing finance agency, you probably will receive a below market interest rate, down payment assistance and other benefits. Housing finance agencies may assist you with a reduced rate of interest, get you your down payment, and offer other benefits. These non-profit programs exist to boost community in specific areas.
Research no-down and low-down mortgages.
- Federal Housing Administration (FHA) mortgage loans
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low to moderate-income individuals qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who need to get home financing.
FHA assists first-time homebuyers and others who may not be able to qualify for a conventional loan by themselves, by providing mortgage insurance to lenders.
Down payment requirements for FHA loans are lower than those for traditional mortgages, even though these loans hold average interest rates. The required down payment can be as low as three percent while the closing costs can be financed in the mortgage loan.
- VA loans
VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can get a VA loan, which typically offers a low fixed rate of interest, no down payment, and reduced closing costs. Although the VA doesn't finance the mortgages, it does certify eligibility to apply for a VA mortgage.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close along with the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase price, and the first mortgage finances 80 percent. The borrower pays the remaining 10%, instead of having to put together the typical 20% down payment.
- Carry-Back loans
In the option of a seller "carrying back a second mortgage," the seller loans you part of his or her home equity. The buyer funds the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Generally, this form of second mortgage has a higher rate of interest.
The satisfaction will be the same, no matter how you manage to put together the down payment. Your new home will be your reward!
Want to discuss the best options for down payments? Give us a call: (718) 477-4405.