Ways to Save: Tips for Getting a Down Payment on Your First Home
Real estate companies in Los Gatos, California are expecting many first time home buyers to be looking for houses in the area during 2020. With its enticing weather, outdoor activities, and family friendly vibes, the Bay Area sees new residents arriving daily. But because approximately 32% of people looking to buy a house are first-time home buyers, many of them aren’t sure where to start when buying a home. Well, if you’re a first time home buyer, one of the first things you should do is save up for a down payment. This step is, unfortunately, one that many buyers forget to take.
Real estate companies in Los Gatos will tell you that the more you have for a down payment, the better off you will be. Many lenders will require you to have 20% of the purchase price as a down payment, which can be thousands of dollars. Otherwise, you will have to pay for PMI (or private mortgage insurance), which can be hundreds of dollars each month. Here are some ways to help you save for a down payment if you don’t want to pay for PMI.
Get Down Payment Assistance
Perhaps the quickest and easiest way to get a down payment is to obtain down payment assistance. You can often find programs for assistance at your local bank. You can also look into Federal Housing Administration (FHA) loans, which are backed by the government. Typically, an FHA loan will require a much smaller down payment. FHA loans are also a good option if you don’t have perfect credit.
If you are a veteran or active in the military, you may be eligible for a VA loan. A VA loan is provided by the U.S. Department of Veteran Affairs and requires no down payment. You can also find loans with smaller down payment requirements if you’re a first time home buyer or buy in a certain neighborhood.
Get a Part-Time Job
Now is the perfect time to find holiday work or a part-time job. The extra money can be saved for a down payment. You should make sure to put all of it into a savings account. You can also ask for a raise or save any holiday bonuses you might be getting at the end of 2019. The extra income can improve your debt-to-income ratio and will make you eligible for a home loan or at least a lower PMI.
Real estate companies in Los Gatos often hear that people are looking to downsize when they buy a new home. You can also use downsizing as a way to save for a down payment. You can move into a smaller apartment or home until you save enough for your dream home. If you have two cars, see if you can manage with just one and sell the other. Watch your spending and cut back on buying expensive coffee or dining out. You can even sell belongings to get some extra money for a down payment. Nowadays, you can sell just about anything online.
Borrow From Family or Friends
It may not be ideal, but borrowing a down payment from family or friends can be a good option. Just make sure to come up with a repayment plan and put it in writing. You can even pay them interest so that they benefit from the loan.
Coming up with a down payment for a new home can be difficult. But with 2019 coming to an end, now can be the perfect time to start saving. Trying out some of these tips can help get you into your dream house a little quicker.