Putting Together Your Down Payment
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Lots of buyers can qualify for various loan programs, but they don't have a large sum of cash to pay the standard down payment. Below are a few straightforward ways to put together a down payment
Tighten your belt and save. Be on the look-out for ways you can reduce your monthly expenditures to save toward a down payment. Also, you can look into bank programs in which some of your paycheck is automatically placed into a savings account every pay period. You could look into some big expenses in your budget 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 vacation.
Sell things you do not need and get a second job. Maybe you can find a second job and build up your earnings. You can also get creative about the items you can put up for sale. You may own desirable items you can put up for sale at an auction website, or quality household items for a tag or garage sale. You could also explore what any investments you have may bring if sold.
Borrow from your retirement plan. Research the specifics of your particular plan. Many people get down payment money from withdrawing what they need from their Individual Retirement Accounts or pulling funds out of 401(k) plans. Be sure you are knowledgeable about any penalties, the way this will affect on taxes, and repayment terms.
Ask for assistance from generous family members. Many buyers sometimes receive help with their down payment help from giving family members who may be willing to help get them in their first home. Your family members may be inclined to help you reach the goal of owning your first home.
Learn about housing finance agencies. These types of agencies offer provisional loan programs to low and moderate-income borrowers, buyers with an interest in sprucing up a house within a specific area, and other particular kinds of buyers 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 benefits. These types of agencies can assist you with a lower interest rate, get you your down payment, and provide other advantages. These non-profit agencies to promote community in certain places.
Research no-down and low-down mortgages.
- Federal Housing Administration (FHA) mortgage loans
The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low to moderate-income families get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA helps first-time buyers and others who might not be eligible for a traditional loan on their own, by offering mortgage insurance to lenders.
Interest rates with an FHA mortgage are generally the current interest rate, while the down payment for an FHA mortgage will be lower than those of conventional loans. The down payment can be as low as 3 percent while the closing costs might be covered by the mortgage.
- VA mortgage loans
Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan does not require a down payment, has limited closing costs, and offers a competitive interest rate. While it's true that the mortgages are not actually financed by the VA, the department certifies applicants by providing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan is for 10 percent of the home's amount, while the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, rather than needing to pull together the typical 20% down payment.
- Carry-Back loans
In a "carry back" mortgage, the seller commits to lend you some of his own equity to help you get your down payment money. In this scenario, you would finance the largest portion of the purchase price with a traditional lending institution and finance the remaining amount with the seller. Usually you will pay a somewhat higher rate with the loan from the seller.
The feeling of accomplishment will be the same, no matter which strategy you use to put together your down payment. Your new home will be your reward!
Need to talk about down payment options? Give us a call at 408-402-5936.