Being a first time home buyer might sound a bit intimidating to some people. Many of us believe the entire process of home buying and becoming a first time homeowner is complex and overwhelming.
Despite these commonly held beliefs, it’s important to know that saving for a down payment is entirely in your reach. It’s true that offering a large down payment can save you a great deal of interest later. However, there’s many ways to appropriately save for a down payment that can earn you the home of your dreams.
The Kelly Parks Team of real estate agents provides you with the following 10 ways you can use in order to save enough money for the first time homeowner down payment.
Transfer a fixed amount into a special savings account every month
Save your money using the most popular and convenient way there is – setting up an automatic direct deposit into a savings account. We wouldn’t recommend saving money in risk-type investment vehicles such as stocks or real estate investment trusts.
Another way to contribute to your down payment amount is not to go on a vacation. Skip it for a year! You’ll thank us later.
Cut down expenses
Go through your expenses and see if there’s anything you can eliminate or at least reduce. When you make room in your budget, it’ll help you save a certain amount of money needed when you’re purchasing a house.
Reduce your high-interest rate debt
If you have credit cards with high-interest rates, make sure you pay them off. High-interest rates may seriously impact your saving ability. Another alternative is to transfer your credit card balances to a card with the lowest interest rates.
Borrow money from relatives
Parents and relatives are there to help when you’re buying a house. Borrow money from them and make sure you add the amount to your loan application.
Borrow money from your retirement plan
There are many company-sponsored 401(k) or profit-sharing plans that permit employees to borrow against their savings to buy a house. Ask your HR or Payroll department.
Sell some of your investments
When selling some of your investments you are basically just transferring your current investment to a new investment vehicle which is your home.
Get a second job
Yet another way to make room in your budget and save for a down payment is to get a second job. That should significantly contribute to your down payment savings.
Make a deal with the seller
Depending on the size of your down payment, if a person who’s selling the house is perhaps a motivated seller, they might take out a second mortgage to cover a certain amount of the purchase price. If this happens, you have to have an attorney to makes sure everything is in order.
Check down payment assistance
Look into all the organizations that might have loan programs for helping with down payments and see if you qualify. Some of them are Federal Housing Administration that offers their FHA loans, the US Department of Agriculture Rural Housing Service , the Veterans Administration, the VA loans from Veterans United or you can consider the conventional loan that conforms with the Fannie Mac and Freddie Mae standards.
A good chunk of savings is required when buying a home. However, by following the steps above you’ll be ready to purchase a dream home for yourself and your family. If you need any other piece of advice regarding buying a home, feel free to contact the Kelly Parks Team of real estate agents. We’re always here to help!