Your Down Payment
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Lots of people who would like to buy a new home can qualify for a mortgage loan, but they can't afford a large down payment. Do you want to look into getting a new home, but aren't sure how you should put together your down payment?
Slash the budget and build up savings. Be on the look-out for ways to trim your monthly expenses to save toward a down payment. You might also decide to enroll in an automatic savings plan at your bank to have a portion of your payroll automatically moved into your savings account. Some effective approaches to build up funds include moving into housing that is less expensive, and skipping a year's vacation.
Work a second job and sell items you don't need. Perhaps you can get an additional job to get your down payment money. You can also get serious about the possessions you actually need and the things you might be able to sell. A closet full of small things could add up to a nice sum at a garage or tag sale. Also, you can think about selling any investments you hold.
Borrow funds from a retirement plan. Check the provisions of your particular plan. You may take out money from a 401(k) for you down payment or withdraw from an Individual Retirement Account. You will need to make sure you are clear about any penalties, the way this will affect on your taxes, and repayment terms.
Ask for assistance from generous members of your family. Many homebuyers sometimes receive down payment help from thoughtful family members who may be willing to help them get into their first home. Your family members may be inclined to help you reach the goal of owning your own home.
Research housing finance agencies. Provisional loan programs are extended to homebuyers in certain circumstances, like low income homebuyers or buyers looking to improve houses in a certain area, among others. With the help of this kind of agency, you may receive an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies may help eligible buyers with a lower interest rate, help with your down payment, and offer other advantages. The main goal of not-for-profit housing finance agencies is promoting residential ownership in certain areas.
Research no-down and low-down mortgage loan programs.
- FHA mortgage loans
The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in assisting low and moderate-income buyers get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgages.
FHA helps first-time buyers and others who would not be eligible for a conventional loan on their own, by providing mortgage insurance to private lenders.
Down payment totals for FHA mortgages are smaller than those of traditional mortgages, even though these loans hold average interest rates. Closing costs may be included in the mortgage, and your down payment can be as low as 3 percent of the purchase price.
- VA mortgage loans
VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a low fixed interest rate, no down payment, and reduced closing costs. Even though the VA does not actually issue the mortgages, it does issue a certificate of eligibility to apply for a VA mortgage.
- Piggy-back loans
You can finance your down payment through a second mortgage that closes with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's price, and the first mortgage covers 80 percent. The borrower covers the remaining 10%, rather than having to pull together the usual 20% down payment.
- Carry-Back loans
In a "carry back" agreement, the seller commits to lend you a portion of his own equity to assist you with your down payment money. In this scenario, you would borrow the largest portion of the purchase price from a traditional mortgage lending institution and borrow the remaining amount from the seller. Often, this form of second mortgage will have higher interest.
No matter your strategy of getting together your down payment, the thrill of reaching the goal of living in your own home will be just as great!
Need to talk about down payments? Call us at 281-542-7392.