Money Matters: Simple Tips to Save for a Down Payment
By Keith Loria
Recent studies have shown that the No. 1 reason keeping people from moving forward with a home purchase is the fact that they don’t have enough money saved up for a down payment. Even though there are lenders who require less for a down payment—although at a higher mortgage rate—many people still have a hard time coming up with the necessary funds.
You can’t count on a lower down payment, either. Lenders remain risk averse and prefer to loan money to borrowers who share as much of the risk as possible. A recent Federal Reserve Senior Loan Officer Survey found that only 8 percent of banks loosened mortgage credit conditions in the first half of 2013, and the larger down payment option remains the industry-underwriting staple.
For those dreaming of buying that perfect home, coming up with a down payment is inevitable. While saving a large chunk of money may seem next to impossible, a few key tips will have you on your way toward owning that dream home.
The first thing you should do is write up a budget so that you can see where your money goes each month. Knowing exactly what you’re spending—and where—makes it easier to cut costs.
By seeing where your hard earned dollars are going each month, you may be more inclined to put your daily coffee money or gym membership dues into a savings account. Another simple way to save money is by making a conscious decision to bring your lunch to work on a daily basis, in addition to trading restaurant meals for home-cooked food.
Another simple way to earn a little extra money that can ultimately be used toward a down payment is to clean up all the “treasure” you’ve been holding onto and host a garage sale. Now’s the time to get rid of that lamp you haven’t used in years or even that collection of comics you’ve been hanging onto since you were a kid. Not only will you be able to bring in some extra cash, you’ll also get a jump start on de-cluttering your place.
Additional ways to save money include spending nights in instead of going off to the movie theater, a concert or an expensive dinner. Cancel your newspaper and magazine subscriptions and read everything online. Stop buying music and books for your tablet and visit the library instead.
You may even want to think about getting a second job, especially as the holidays roll around and you can take advantage of extra hours. This doesn’t have to be a permanent thing, but sacrificing a little free time for a year or so will be worth it when you can start relaxing in your own home.
For more money saving strategies, contact our office today.