Unexpected Sources of Down Payment Funding
Down payments are an important part of the home buying process. Reaching that critical 20% mark helps position you as a serious buyer. It also has major implications for your financing situation – from increasing your chances of approval to lowering your monthly payment. But many buyers struggle with developing a strategy to save such a significant sum. While there are programs that help you buy with as little as 5%, saving as much as possible is a wise step for prospective buyers. Here are some tips that have helped experienced buyers reach their down payment funding goals.
Evaluate your budget and cut expenses
One of the easiest ways to get to a 20% down payment is to increase your rate of saving money. Can you find ways to slash your spending? If you made coffee at home each morning and saved $3, that’s $1080 into your home fund over the course of the year. Bringing your lunches to work, reducing how often you eat out, and canceling cable are examples of small steps that can add up to thousands in savings over the course of a year. Some people planning to buy actually adopt a very minimalistic lifestyle for a short period of time, to dramatically accelerate their savings. It’s often easy to do this, knowing that it’s just until you reach your goal.
Find ways to make more
Increasing your savings requires one of two things: spend less or make more. When you’ve cut your expenses as far as you’re able or willing to, it’s time to look at how you can generate more income. Can you pick up overtime at your current job? Can an unemployed spouse take on a seasonal, part-time job? Is it feasible to take on a second job for a short period of time? Do you have specific skills – for example web design or marketing – that could allow you to take on consulting clients? Strategically increasing your income is one of the best ways to speed up your progress toward your down payment goals.
Leverage your assets
If you’re working to reach a specific sum for your down payment, another avenue to consider is your existing assets. Do you have unused electronics, second TVs, or even cars or motorcycles that you’re barely using? It may be time to sell these to give a nice bump to your down payment fund. Selling unused possessions also has the secondary benefit of less to pack and move when you finally do buy your dream home. Some buyers also have retirement assets that they choose to leverage toward a down payment. It’s important to consult your financial advisor or tax professional to decide if this route is right for you. But in some cases, for example, it’s possible to borrow against a 401K and repay it to yourself with interest.
Are you a buyer in the Las Vegas area that’s interested in discussing your financing options? Contact Sydnee Johnson today to learn more about financing programs available to buyers with different levels of available down payment funding.