It doesn’t matter if you are a first-time homebuyer or a seasoned property veteran. It is important to save as much cash as you can for a down payment.
Generally, most lenders want a down payment of at least 20 percent for a standard mortgage. But you might have other options. Depending on your credit score and a few other factors, you may be able to qualify for an FHA mortgage loan, which requires less down.
No matter how much money you pay up front for your dream home, in today’s economy, it can be tough to free up this money. Fortunately, MSN Real Estate has a few strategies to drum up the cash needed for a down payment.
1. Start saving sooner, rather than later
Perhaps the safest way to save money for a down payment is to set aside money from every paycheck into a special high-interest savings account.
Start by going over your monthly expenses and seeing how much you can afford to save. To ease into the habit, you may want to start small and slowly increase the amount as you adjust your budget.
Be sure the savings account your set up with your bank or credit union has the highest rate. Shop around if necessary. This way you money has a chance to grow and mature, which can help you reach your goal faster.
2. Utilize random assets
If you currently make a number of monthly payments on luxury items, such an extra car, boat or motorcycle, consider selling these items and using the cash for a down payment. These items usually do not offer a major return on your investment, unlike a home.
Additionally, with tax season a few short months away, you should consider holding on to your refund check and putting it into your down payment savings fund.
3. Cash in your life insurance policy
If you have a whole life insurance policy, you may be able to borrow funds against this account. However, hold off if you still have children younger than 18 years old. This option generally only used if you are purchasing a home for retirement.
Owning a home is a major financial step and should be part of your overall financial plan. After making a mortgage rate comparison to find the best loan, Freedom Mortgage can help you stay on top of your mortgage.
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