You can buy a home for very little money down, but we don’t recommend it. Why would you want to do that and pay hundreds of additional dollars every single month to someone for Private Mortgage Insurance (PMI) until your loan value is less than 80%? Really, you don’t want to pay that. It is expensive, and it is a huge waste of money. Instead, you want to save your money and make a down payment. Some mortgage lenders will allow you to put down only 20%, but 30% is even better.
I know it’s not easy to save that much money, especially if you are already on a tight budget and not looking forward to spending years saving money before you become a homeowner. The good news, however, is that you really don’t have to wait that long. We have a few amazing suggestions that you might not have thought of that might make it easier, faster and more affordable for you to save up for a down payment for a mortgage and become the kind of homeowner you want to be as quickly as possible.
Save your tax refund
Do you get a tax refund? If you do, consider yourself lucky. I know that not many people advocate paying so much into the IRS that you provide them with an interest free loan for a year while you could be earning interest, but we have a thought. You might not be able to save that kind of money otherwise, so why not just look at the silver lining. The silver lining is that you now have a lump sum you can put into a savings account that puts you much closer to owning a home.
Save all windfalls
Not everyone finds that a windfall is a life problem that they have – no matter how much we all might wish we have those problems. An escrow reimbursement check at the end of the year, a little money left to you by a relative that passed away (due to being the ripe old age of 100 and not anything tragic or unexpected), or even the sale of something you thought was worthless than actually ended up being quite valuable.
These windfalls are all monies you did not see coming or expect, so don’t waste this money on something else. Put it all away, save it and call it a day. It’s going to make you far happier and much more willing to keep at it once you see how close you are to your goal.
Save your overtime
For a year when my husband’s bank merged with another bank, all salaried employees were put on an hourly wage. This was annoying at first, considering how much my husband works from home, but it turned out to be the most amazing thing. He is always on-call and always on the phone with people on the weekends, at night and even early in the mornings when people are having issues with their computers or phones. That’s all time and-a-half and he made so much money in overtime that year that they were quick to put him back on salary. When his paycheck was sometimes thousands more than usual, we’d just put it away. It’s not part of our living expense, so we saved it. This is a great way to save money for a down payment.
Reward yourself for saying no
If you’re like me, you feel really proud of yourself when things stay in your shopping bag online and don’t show up at your doorstep. When you are so certain you are going to make a purchase, and then you don’t do it; it’s amazing. I love this, and I think you should reward yourself when you don’t buy something or when you save money. Take what you would have spent, put it into your savings account and watch that account grow.
Save your savings
Another great way to save money is to save your savings. Did you save $8 on your purchase at the supermarket thanks to sales or coupons? If you did, put that $8 in your savings account for a down payment. It’s a little here and there, but it adds up very quickly.
Using these methods, I wouldn’t be surprised at all if you are able to save enough money for a down payment in no time at all. It’s not even that difficult to do since most of it is fairly thoughtless work at the end of the day. You can do little things every single day and watch your money grow. You can round up every purchase and make a transfer of the excess every day. You can sell things online. You can start a small side business. You can do whatever you want; you just need to know that you can do it to motivate you a bit to get started.
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