Saving for a Down Payment
Getting a mortgage is one thing, but part of the home buying process is saving for a down payment. A down payment is usually 5 to 10 per-cent of the cost of the home, meaning that they can be, in some cases $10,000 that comes straight from the bank account. For many people, a down payment is the reason that they keep renting, as it is hard to save up that kind of money. Here are some tips, from a leading mortgage broker, Ryan Michell.
You Must Prioritize
Saving for something important, like a home, is all about priorities. Do you go out to eat all the time, take expensive vacations, buy all the latest stuff and drive brand new cars? Are you willing to tighten your belt and save for a house? It is up to you, which is more important? If saving for a home is one of your top priorities, then try to identify other areas where you can cut back so that you can put more money into your savings. The best way to identify areas to cut back in is to do a budget. If you haven’t put together a budget yet, that is probably the best place to start.
Pay Off Your Credit Card Debts First.
You can’t really save money if you are paying a lot of interest to someone else. The first thing you should do is pay off all your debts. Start with your smallest high-interest debt, and pay it off. Then take the minimum payment from that debt and use it to help you pay off the next small debt that has the highest interest rate. Once you have that one paid off, the two minimum payments that you used to pay for those small debts can help you pay off your next debt faster. If you try to apply for a mortgage with too much consumer debt, you won’t qualify. For most people to qualify for the house they want, they usually have to pay down their credit card debts first.
Look for Cheaper Ways to Do Things
This is how the smartest people save money. They make a lifestyle of finding cheaper ways to do things without diminishing their fun. Some of the best examples are:
- Do you buy a lot of new books? There are zillions of books that you can borrow for free, from the library.
- Do you go out to lots of movies? Try renting or Netflixin’. A lot of people are dropping their cable to just have streaming services.
- Do you dine out a lot? Try going out less, and spending the time that you would usually be in a crowded, loud restaurant to try a new recipe at home. It saves money, and provides a quiet time to spend with your loved one.
See if Your City Has A First Time Homebuyers Program
From time to time, some cities have programs where they provide new home buyers with part of their down payment for their first home as an interest-free loan. Programs like this are usually initiated for two main purposes: to make it easier for first-time homebuyers to afford a home in an expensive city, and to redevelop part of the city that is struggling. These programs usually have very specific requirements. You can check with your city hall to see if your city has a program like this, Regina has done it in the past.