Ryan Seward - RE/MAX Select Realty



Posted by Ryan Seward on 9/14/2017

One of the challenges that individuals and couples face when buying a house is finding the money to put toward their mortgage down payment. Since you'll work with a lender to cover the balance of your mortgage, taking on another loan to cover your mortgage down payment may not be what you want to do.

Build your mortgage down payment early

The sooner you decide to buy a house, the sooner you can start cutting back on spending and increasing your savings. This single move keeps you from taking on unnecessary debt. It also teaches you better money management skills.

Expenses that you could trim or cut out altogether to improve your savings include clothes, tickets to live entertainment events like concerts and stage plays and jewelry. Money spent on eating out at sit down restaurants, out-of-town trips and electronics are other expenses that you could cut and invest in your savings.

In addition to cutting back on spending, following are more ways to find more for your mortgage down payment. Use three or more of the steps to make it easier for you to build $10,000 or more in savings.

Open separate bank account - Start a bank account that you use solely to invest in your mortgage down payment. This bank account should not be attached to a debit or credit card. Use the account strictly to deposit money for your down payment into.

Pay off accounts that require you to pay interest - Examples of these accounts are credit cards, computers and furniture accounts that attach interest to your payments. Definitely, pay off high interest accounts as soon as possible. You could make payments 10 or more days before they are due to reduce the amount of interest you pay on the accounts. Similar to how American Express works, try to pay off your total credit card balances within 30 or 31 days. Some credit card companies charge higher rates if you keep balances on a card for two years or longer.

Invest in certificates of deposit (CDs)- If you have an IRA or 401(k), consider working with your financial advisor to purchase CDs. You'll get a bigger return on CDs if interest rates increase.

Contact state housing agencies - You may be able to get financial assistance from state housing agencies. This help may come in the form of grants or loans. To avoid taking on debt, opt for the grant path.

Sell products and items - Raise money for your mortgage down payment by selling clothes, shoes and household items that you don't use. Online resellers are just one avenue that you could use to raise money by selling items.

Freelance or take on contract work -The freelance community is growing. All you need is a computer and a skill to start earning money as a contractor. Jobs you could take on as a freelancer include web designer, writer, virtual assistant, life coach or consultant. You could also find money for your mortgage down payment through gigs with taxi and transportation companies.

Despite your current financial situation, you can grow your savings. You can find money to put toward your mortgage down payment. To successfully save your mortgage down payment, you need to focus. You need to track your monthly expenses. If you're striving to become financially disciplined, you may need to track how much you spend on a weekly basis.




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Posted by Ryan Seward on 5/11/2017

If you are thinking of buying your first home, youíre thinking of making the single biggest purchase of your entire lifetime. Real estate is complex. From getting finances in order to understanding the entire process to securing the home you love, thereís so much that youíll need to know when it comes to buying your first home. 


What Is A Down Payment?


A down payment is a one-time cash payment that youíll provide at the closing table when you buy a home. How much your down payment is will have an effect on how much your monthly mortgage payment will be. It will also affect your initial home equity value. 


Should You Keep Renting?


First, youíll need to think of a savings goal and a timeline. The general rule is that if you own a home for at least 5 years, you have gotten your ďmoneyís worthĒ out of the closing costs and the fees you paid at the time you purchased your home. If you donít think youíll stay in a home for at least 5 years before making another move, you may want to consider renting until you know where you want to settle. 


What Can You Afford? 


Youíll need to calculate just how much home you can afford. Look at potential monthly mortgage payments plus taxes, fees, insurance, utilities and other monthly expenses that you have.


In dual-income households, itís nice if the living expenses can be covered just by one personís paycheck. Once you have an idea of your budget, you can price out homes that will meet your needs and be in your price range. 


Why You Should Save More


The best practice in buying a home is to put 20% down on the house. With this sizable down payment, it will be easier to get approved for a mortgage. Youíll also avoid needing PMI (private mortgage insurance.) This is an additional cost for people who put down less than a 20% down payment. This can cost you a lot of money each month, so itís best to save as much as you can for that initial down payment. 


Donít be discouraged. You can still buy a home with a lower percentage of a down payment, but youíll have to pay for the PMI and include the additional expense in your budget. The Federal Housing Administration has many different options available that allow you to put a smaller down payment on a home, so do your homework.  


How To Save 

           

Once you get an idea of about how much youíll spend on your home, you need to take action and start saving. There are many ways that you can save automatically without even thinking about it. You can choose a fixed amount or percentage of your paycheck and save it automatically into the house fund. Save as much as you can so youíll be able to make your home purchase more quickly. You may even want to consider putting your money into a money market account for a higher return on your savings once you reach a certain goal. 


Donít Forget To Save Your Bonuses


Whether you have received a gift or a sizable Christmas bonus, make sure that you put that money away towards your home purchase. Every little bit helps. While we may have an inclination to want to spend the money on more immediate things, youíll be happy that you saved your money when you head to purchase your house! 


Use Your IRA


The IRS allows a tax benefit for first time home buyers. You can take out up to $10,000 out of your IRA or Roth IRA for a first time home purchase. Your Roth IRA account must be at least 5 years old in order for you to do this. Distributions from this account are tax-free, but youíll need to pay tax if you withdraw form a traditional IRA. You should discuss any withdrawals that you do make with your financial advisor and your tax advisor. This could be an opportunity for you to build your wealth in a new way, so make an informed decision. 


Happy saving and happy house hunting!