Down payment is perhaps the only obstacle which bars a prospective homeowner from getting a home loan with an affordable interest rate. Did you recently get a hike at your workplace? Are you taking active steps to pay off debt on your own? Are the present mortgage rates remarkably low enough? As we see that the rates of rent is getting higher day by day, it’s high time we break down this simple calculation and tell our prospective homebuyers how they can get a home loan at a reasonable rate.
Do all home loan lending institutions demand a 20% down payment?
No, not all lenders will force you to pay down 20% of the down payment as this hurdle is a bit lower than what you could have ever thought. Conventional lenders prefer 20% down payment but these days there are lots of options available in the market for down payments, particularly for the people who are buying a home for the first time.
Did you know that there are home loans which are guaranteed by FHA or Department of Agriculture or even by the Department of Veterans Affairs? Well, these are all low down payment loans. You will be even happier to know that the mortgage loans which are backed by the USDA or the VA don’t need you to pay even a dime as down payment. Nevertheless, the VA loans will charge you a funding fee but that too can be easily rolled onto your monthly mortgage payment.
A home loan backed by the FHA can be got with a down payment that’s as low as 3.5% but you would require paying PMIs or private mortgage insurance payments to let the lenders accrue the costs in case you default.
Can you crowdfund money for a down payment?
As we see crowdfunding is the actual dream for grabbing sudden and unexpected cash from strangers apart from lottery. Though this is an easier option but as everything else, there are catches here too. You can’t get this kind of crowdfunding done on Kickstarter as they don’t allow personal crowdfunding while taking out a mortgage loan. There are other sites like GoFundMe where too you won’t get money as long as it is concerned with making a mortgage down payment. However, another viable option would be FeatherTheNest which permits you to create an online profile through which you can receive contributions to your down payment.
Loans from families and down payment gifts
How about getting help from your family members in order to be able to pay off the mortgage loan? Here the donor will require verifying in writing that he is donating a certain amount to the person in question and that they have enough good financial condition to pay back the money. Such loans and gifts can be accepted as down payments on mortgage loans.
Therefore, if you’re someone who is all set to buy a new home but you’re not pretty sure about being able to make the required down payment, take into account the above mentioned steps to achieve success.