Your Down Payment
Many buyers can qualify for various loan programs, but they don't have a lot of money to put up a down payment. Here are a few methods that will help you get together your down payment
Cut expenses and save. Be on the look-out for ways to reduce your monthly expenses to set aside money for a down payment. You also could enroll in an automatic savings plan at your bank to automatically have a predetermined portion of your paycheck deposited into a savings account. Some practical ways to build up funds include moving into less expensive housing, and staying home for your vacation this year.
Sell items you do not need and get a part-time job. Look for a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also get creative about the items you can put up for sale. You may own collectibles you can sell at an auction website, or quality household goods for a garage or tag sale. Also, you might want to think about selling any investments you hold.
Tap into retirement funds. Research the details of your individual plan. Some homebuyers get down payment money by withdrawing from their IRAs or pulling funds out of 401(k) plans. Be sure you know about any penalties, the way this will affect on income taxes, and repayment terms.
Ask for a gift from your family. Many homebuyers somtimes receive help with their down payment assistance from caring family members who may be eager to help them get into their first home. Your family members may be pleased at the chance to help you reach the goal of owning your first home.
Contact housing finance agencies. Special mortgage programs are given to buyers in certain circumstances, such as low income homebuyers or homebuyers planning to remodel houses in a specific place, among others. Working through this kind of agency, you probably will get an interest rate that is below market, down payment assistance and other perks. These kinds of agencies can assist you with a reduced interest rate, help with your down payment, and provide other assistance. The principal goal of non-profit housing finance agencies is promoting the purchase of homes in targeted parts of the city.
Research no-down and low-down mortgage loans.
- 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 and moderate-income families qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA offers mortgage insurance to the private lenders, enabling new homebuyers who might not qualify for a conventional mortgage loan, to obtain a mortgage.
Interest rates with an FHA loan are usually the going interest rate, but the down payment for an FHA mortgage will be smaller than those of conventional loans. The down payment can go as low as 3 percent while the closing costs may be covered by the mortgage.
- VA mortgages
VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which generally offers a low fixed rate of interest, no down payment, and reduced closing costs. Even though the VA does not actually provide the loans, it does issue a certificate of eligibility to qualify for a VA mortgage.
- Piggy-back loans
You can fund your down payment using a second mortgage that closes at the same time as the first. Often the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. Instead of the traditional 20 percent down payment, the buyer just has to pull together the remaining 10 percent.
- Carry-Back loans
In the option of a seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lending institution and borrow the remainder from the seller. Usually this type of second mortgage has a higher rate of interest.
The feeling of accomplishment will be the same, no matter how you manage to come up with your down payment. Your new home will be worth it!
Need to talk about your down payment? Call us at (718) 477-4405.