Buying a House Series – #2 Tips on Saving Up for a Down Payment on a Home

One of the hardest parts to buying a house is pulling together your down payment. This “Buying a House Series” is made with years of experience on the best way to get your life in order so you can get a loan and find the home you want at the price you want. You will need to get a down payment together before getting approved for a loan so use the following the tips below to make the process much smoother on you…

Don’t Rush It

Getting together your down payment will take some time. You have to start somewhere so why not start today!

Get Rid of Your Unnecessary Expenses

Saving for your down payment shouldn’t be a huge sacrifice. A little lifestyle change should do it. Here are some ways to trim $10,000+ of un-needed (not always unwanted) expenses…

• Replace cable television with a streaming service like Hulu or Netflix. Average savings – $2,500+ a year
• Take a run and cut your gym membership. Average savings – $750+ a year
• Ride your bike for short commutes and save some gas money. Average savings – $1,500+ a year
• Pack your lunch instead of going out everyday. Average savings – $750+ a year
• Start a change jar.  Average savings – $750+ a year
• Turn down the thermostat 3 degrees. Average savings – $250+ a year
• Cut down on dinners and drinks out a week by 3 times. Average savings – $4,000+

Open a Savings Account Just for Your Down Payment

Savings accounts keep you savings separate and you will be able to make some money by keeping a balance.  Check you balance each month and you will see in black and white how close you are to your downpayment.

Have Automatic Deposits to Your Savings From Your Paycheck 

Most employers allow you to deposit your check into multiple accounts.  Have some directed to your savings and you won’t miss it as much.

You Could Tap into your IRA Account

Traditional or Roth IRAs allow you to withdraw up to $10,000 for a home. While withdrawals from a traditional IRA will be taxed, a Roth IRA you’ve owned for more than five years won’t be taxed at all, as long as you’re a first-time home buyer. Combine an IRA contribution with your other savings and you will quickly have enough for your down payment.

Check Your Options For Payment Assistance Down Payment Programs

Different down payment assistance programs exist based on the city and state where you live. Find out if you have any such programs. Most down payment assistant programs offer up to $15,000 in a grant or low-interest loan. You will have to qualify with your income to being below the area median in most cases. Check with mortgage companies and realtors to find out your options.

Next Steps

Now that you have your credit in good shape and your downpayment started, it’s time to go looking for a home. Your realtor and mortgage agent will be able to help you figure out what you can afford