Top 10 Ways to Save the Down Payment
Many people save for years to cover the down payment. The higher the down payment, the lower the monthly payment and the loan. Here are some ways to make sure you have enough money when it comes time to apply for a mortgage.
1. Transfer a fixed amount each month to your special savings account
This is the most popular and practical way to save. Set up direct deposit to be automatically credited to your savings account. Pledge never to use these savings for anything other than your down payment.
2. Eliminate vacations for one year
By saving money you would spend on a vacation, you can make significant contributions to your down payment.
3. Cut your expenses.
Go over your expenses and see what you can cut or eliminate. Put the money you would have spent on those things in your savings account for the down payment.
4. Reduce your debt with high interest rates
High interest rates on credit cards can seriously affect your ability to save. Pay off your credit cards with high interest rates. Start with the card with the highest interest rate; when you have paid all the balance, cancel it and continue with the payment of the next one. At the very least, transfer your credit card balances to the card with the lowest interest rate.
5. Borrow from a family member Many parents or family members help out when it’s time to buy your first home in Langley. Donations can come from your family, spouse or partner. Just be sure to include that gift amount in your loan application.
6. Apply for a loan from your retirement plan
Look into your plan for penalty-free retirement options for home buyers. Many company-sponsored or profit-sharing 401 (k) plans allow employees to borrow from their savings to buy a home. Your human resources or payroll department can help you.
7. Sell some of your investments
Take this as an easy way to move some of your current investments to another investment vehicle – your home! As you make your mortgage payments, your home equity increases. As the value of your home increases, so does your return on investment.
8. Get a second job
The earnings, albeit temporary, from a second job can help you make large contributions to your savings for a down payment.
9. Make a deal with the seller
A motivated seller might take out a second mortgage for you to cover part of the purchase price. If you are considering this option, be sure to have a qualified attorney go into detail about everything.
10. Seek assistance with down payment
Some organizations may be able to help you with your down payment. Find out if you qualify from the Federal Housing Administration, the Rural Housing Service of the US Department of Agriculture, and the Veterans Administration. Also check with your local housing authorities to find out if they have programs that may help you.