Rolling Hills Estates Saving for a Down Payment

As a country, Americans have not been the best at saving money. A report recently released by the Bureau of Economic Analysis charts our efforts to save continually spiraling down and it also indicates the amount we save is minus half a percent. With this in mind, it is easy to see why first-time homebuyers struggle to find a down payment.

Here in America, home ownership has increased from 25% at the start of the twentieth century to 67% at the end of it. Throughout those years, many homebuyers worked hard to come up with a down payment. In particular cases, the banks expected as much as 50% down payment prior to lending on a mortgage.

Today, the preferred down payment is normally 20%; however, very few people have that much ready money on hand. Although many lenders offer mortgages without a down payment, it is always makes more sense to save up as much as possible. A down payment has many advantages. The more you put down, the lower your mortgage will be, which means lower mortgage repayments.

Additionally, the higher the down payment is the more you will be able to pay for a home. Lenders have learned from experience that more homeowners default on their mortgages if a down payment is less than twenty percent of the sale price. For this reason, they may require you to pay private mortgage insurance until the equity in your home reaches twenty percent of the sale price.

It is not easy to save for a mortgage down payment if you are not used to saving money. However, you might find the following tips useful:
If you lack the discipline to save, try saving your tax refund. Change your withholding payoff from 1 to zero. This means your employer will have to pay more to the I.R.S and downgrade you paycheck accordingly. In this way, you may receive a larger income tax refund.
Will your parents give you a down payment? The law allows each parent to give a gift of a specific amount without any tax consequences.

If this is not possible, you may be able to ask them for an unsecured loan where they give you a better interest rate than you would get from the bank. A good way to make savings accounts grow is to save the same amount each month.
Perhaps you could take on a part-time second job or ask your boss for a raise. Spend an evening jotting down every accomplishment over the past year and times you have increased the company’s bottom line. Take this to your boss and point out your value to the company.
If he undervalues you, perhaps you can find a better paying job. Network with your peers, send resumes or cold call on companies where you would like to work. Don’t wait for them to advertise a position, as you may be the very person they need.

Check into whether you can tap into your retirement funds, as some allow you borrow from them, in order to buy a home without penalty.

If you have served in the armed forces, it is always a good idea to check out government programs. You might meet the criteria for a loan sponsored by the Veterans Administration.
The government is also running a number of assistance programs for down payments, tailored around the first time homebuyer. There are also neighborhood specific programs to help encourage home ownership in some neighborhoods.

Call Gordon or Keith today for a recommendation to a good lender.

Owning your own home is the American dream. Start planning and saving today!