5 Creative Tips to Save for a Down Payment
Thinking about making the leap from renter to buyer? At a time when rental fees are increasing, being able to set aside any amount of money as a renter is tough. Given current market dynamics and relatively low mortgage rates, a monthly mortgage payment could be a more cost-effective option for some renters. Here are five ways to help speed up the saving process to finally purchase a house!
With some planning, budgeting and time, setting aside money regularly to your savings account can help fund your down payment for a house. According to the 2018 Zillow Consumer Trends Report, it’s the most common way buyers save with 70% of home buyers obtaining a mortgage by using their savings to fund their down payment. Saving up the old-fashioned way isn’t always easy and more importantly, it takes time. In tighter markets, saving for a down payment can be more challenging as home prices increase along with minimum down payment requirements.
No matter the season, it’s always a good time to do a de-clutter and organize your stuff. Selling off your knick-knacks, furniture or electronics you don’t use anymore could help you bring in some cash to save while purging items you don’t need. You don’t have to wait for a good weekend to do a yard sale either. Depending on what you’re selling, you can use online sites to connect you with potential buyers.
Do you really need all those extra channels with your cable package? Could you cut out your coffee shop run on your morning work route? Have magazine subscriptions you can live without? Making a few concessions like these could help you save up money faster! Just make sure you are setting it aside in your savings, so you’re not tempted to spend it elsewhere.
Renting smaller spaces means paying less each month in your rent. If you can swing moving from a one-bedroom to a studio or go from renting a house to renting a smaller apartment in order to save money, you might find that the money adds up quicker than you think towards that down payment.
Cash Over Gifts
Many home buyers speed up the saving process by asking friends and family for cash gifts towards their down payment in place of wedding gifts, birthday presents or gifts for any other occasion. This could require some tact on your end to keep it from getting awkward, but people more than likely would be happy to help you on your home buying journey.
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While a 20 percent down payment is considered ideal, it’s not actually as common as you might think, nor is it a necessity to buying a home.