Putting Together Your Down Payment
Many borrowers can easily qualify for various loan programs, but they can't afford a large down payment. Here are a few straightforward ways to get together your down payment
Slash the budget and build up savings. Turn your budget upside-down to uncover extra money to save for your down payment. Also, you can look into bank programs through which some of your take-home pay is automatically placed into savings every pay period. Some practical approaches to build up funds include moving into less expensive housing, and skipping a year's vacation.
Sell items you don't need and find a second job. Maybe you can get an additional job and build up your earnings. Additionally, you can make an exhaustive list of items you may be able to sell. Broken gold jewelry can be sold at local jewelers. Maybe you own collectibles you can put up for sale at an online auction, or household goods for a garage or tag sale. Also, you might want to look into selling any investments you own.
Borrow money from your retirement plan. Check the parameters of your particular plan. Many people get down payment money by withdrawing what they need from IRAs or borrowing from their 401(k) programs. Be sure you understand about any penalties, the effect this could have on taxes, and repayment obligation.
Request a gift from your family. Many homebuyers are often lucky enough to get help with their down payment help from thoughtful family members who are anxious to help them get into their own home. Your family members may be pleased to help you reach the milestone of having your own home.
Research housing finance agencies. These agencies provide provisional mortgate loan programs to moderate and low income homebuyers, buyers with an interest in remodeling a house in a specific area, and additional groups as defined by the agency. With the help of this kind of agency, you can get an interest rate that is below market, down payment help and other advantages. These types of agencies can assist eligible buyers with a lower rate of interest, get you your down payment, and provide other benefits. The central mission of not-for-profit housing finance agencies is to boost home ownership in specific areas.
Research no-down and low-down mortgage loan programs.
- FHA mortgage loans
The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a critical part in assisting low to moderate-income Americans get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who wish to get home financing.
FHA aids first-time homebuyers and others who might not be able to qualify for a traditional loan on their own, by offering mortgage insurance to private lenders.
Interest rates for an FHA loan normally feature the market interest rate, while the down payment amounts for an FHA mortgage are below those of conventional loans. Closing costs might be included in the mortgage, while the down payment could be as low as 3% of the total.
- VA mortgages
Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This particular loan requires no down payment, has limited closing costs, and offers a competitive rate of interest. Even though the loans don't originate from the VA, the office certifies borrowers by providing eligibility certificates.
- Piggy-back loans
You may finance your down payment using a second mortgage that closes along with the first. Often the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. The borrower pays the remaining 10%, instead of putting the usual 20% down payment.
- Carry-Back loans
In a "carry back" situation, the seller agrees to loan you some of his own equity to help you get your down payment money. The buyer funds the highest percentage of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Usually you'll pay a slightly higher rate with the loan financed by the seller.
No matter your strategy of pulling together your down payment money, the satisfaction of owning your own home will be just as great!
Want to discuss down payment options? Call us at 248-644-1200.
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