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Ways to save for a house down payment

National research still shows that for most people, owning a home is less expensive than renting.  The number one reason people still rent, they don’t have the money for a down payment.  There are a few unconventional ways to save for a down payment besides just skipping the morning latte.
How much should be saved for a down payment?
Normally, you can qualify for a mortgage with as little as 5% down and for a few select programs, even 3% down is enough.  If you can get to 10%, that will be more likely to lower your rate but it is not a necessity.
What is the first step for saving for a down payment?
Start with deciding how much you can save and how quickly you want to buy a home. These two factors can help you develop a solid savings plan.  Typically it will take someone about 18 – 36 months to save enough for a house down payment. This also helps you decide how much house you can afford if your down payment is your only limiting factor.  
Are there any key steps to find the extra money to save?
Many experts will talk about trimming your budget based on eating out and entertainment.  If you really want to kicks start your savings, there are two ideas to consider.  First start with your rent payment.  If you can lower your current rent payment by moving or downsizing that can provide a significant amount of monthly savings.  Next, if you have a car payment, think about trading so you can lower your car payment.  These two steps might net enough savings for your down payment savings plan to be achieved much sooner than expected..
Are there any other strategies to use?
Some loan programs allow for all or a portion of the down payment to be in the form a gift. There are also many resources available for first time homeowners that have lower down payment options.  Talk to a lender and a realtor early in the process so you can be completely informed on your options. Limited and gift down payment options can help you achieve homeownership much quicker.

Posted: 9/16/2014 with 0 comments

Categories: Homeownership, Money Matters

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