Save For Home: 6 Tips to Help Get Your Home Down Payment
By Elizabeth Cutten
Saving up for a down payment to purchase a home may seem like a task that takes forever, but if you know how to save additional cash, you can actually save it rather fast. Before you start the process of saving for a home, you will want to keep in mind that you will want to purchase a home within your budget. Experts will tell you that your home mortgage payment should be no more than 25-35% of your monthly take home pay, and your down payment should always be more than 20%. If you have your eyes set on a home that is in the $200,000 payment range that would be a $40,000 down payment. How can you save for this, you might be wondering? Let’s take a look at what you can do.
Tip #1
Can you work extra hours at work? What kind of job do you have? Can you head into the office and ask your boss for more hours? Some employees have the luxury of doing this. Even if you make an additional $200/week by doing this, it can add up fairly fast if both you, and your significant other are doing the same thing.
Tip #2
Start selling your junk: Look around your house and see what you can do to get rid of some items in your home. There’s a good chance that you have $1,000 or so worth of junk just laying around. Start up a garage sale, sell on Craig’s list or even sell on eBay. You’ll be surprised what you can get for some items.
Tip #3
Cut down the bills: Do you have a cable package that has more than 250 channels? Do you have the latest smart phone? Try to lower these monthly “premium” bills. I was able to do this when saving for a home and it saved me around $250/month in savings alone. All I did was get rid of Netflix, drop my cell phone to a cheap plan and I signed up for a basic cable package.
Tip #4
Look at your cars: I hope that you’re not driving around a $40,000 car with a $600 payment. Car insurance can be expensive and so can the car payment itself. Try and highly consider purchasing a car that is only around $5,000 or so. Yes, the cars are still going to work and trust me, the payments are going to be a lot lower.
Tip #5
Snag a side job: What kind of side jobs are in your area? If you can’t find one, then maybe you will want to start up one yourself. What you can do is mow lawns, deliver papers, help out the elderly and so much more. Hey, you don’t even know if this can turn into a lucrative, full time job for the future.
Tip #6
Invest: Try hard to not spend your money. You don’t want to go out to the bars, or out to eat every other night. Instead, throw your money into a stock, or even a small CD. Every interest point is going to help you for the future.
As long as you have a goal and you stick with it, anything is going to be possible. Strive hard to get that down payment because not only are you going to avoid things such as PMI, you will also have a lower mortgage payment as well!
This was a guest post provided by Elizabeth Cutten. You can find more of her work over at FindSecuredCards.com, a blog dedicated to helping people get out of debt, as well as avoid it in the future.
Down Payment For A House: You Have Options!
By Karen Boies
Many renters feel they cannot afford to purchase a home because they have not saved for a down payment. There are solutions available today that can help first time buyers with their down payment.
The minimum down payment is 5%. Many lenders allow for a gifted or borrowed down payment. Some lenders offer a cash back option that can be used for your down payment.
Gifted down payments are provided by an immediate family member. The family member must sign a letter showing the amount of the gift and that no repayment is expected.
If you have excellent credit and very little debt, but have access to a line of credit or a personal loan, you may be able to borrow the down payment. The loan will have to be accounted for in the debt servicing ratios. You will need to have 1.5% of the purchase price saved to show you can cover the closing costs.
Some financial institutions offer a “free down payment” or “flex down” program. This covers your down payment. You do pay a slightly higher interest rate. But this program will allow you to invest in home ownership and start accumulating equity earlier. You must remain with the original lender for the full initial five year term or you will have to pay back the down payment.
There is also the RRSP Home Buyers Plan option. If you are a first time home buyer you can withdraw up to $25,000.00 from your RRSP tax free to purchase a home. This is for owner occupied property purchases only. You must repay the RRSP within 15 years, commencing no later than the second year in which the withdrawal was made.
There are many options available to those wanting to buy their own home. It is important to speak to a mortgage professional to learn all of your options. They will provide you with the education and support to help you make an informed decision.
I am a mobile mortgage planner in Greater Vancouver. I am honored to work with women to help them understand the home financing process! I want to help you make financial decisions that you are comfortable with and that save you money in the long run. If you have any mortgage related questions, please call me at 604-726-9550 or email me at Karen@mortgagecentrecitywide.com
Saving For A Down Payment: 3 Tips to Get You Started
By Sheila Walkington
When it comes right down to it there are a lot of good financial reasons to buy a home. Not only do you build up equity every month by paying down your mortgage, but also having a mortgage free home in retirement is one of the best financial plans anyone can make. And there are a lot of very real emotional reasons why people want to own too, like wanting roots and a place that is all your own.
But, does it still make sense to buy a home? In Vancouver, prices have gone up considerably over the last 5 years. You might think that would be a deterrent, but our record low interest rates still prove to be a serious enticement to buy real estate. And, what other investment can demonstrate such a high tax free return on investment and give you shelter from the rain in the colour scheme of your choice?
There is no doubt, be it a condo apartment, a townhouse, a carriage house or a bungalow with a white picket fence, it’s a BIG investment. And it can feel like an overwhelming endeavor. It is important to remember that buying a home, particularly if it is your first, is actually the last thing you want to do – sequentially speaking. The first step is dreaming, then goal setting, followed by researching, and of course saving.
David Bach, author of Start Late, Finish Rich has a great story that illustrates the journey one man took to buy his first home. The story begins with the man giving all sorts of excuses as to why he couldn’t possibly buy a home: in debt, wife having a baby, etc. But, David challenged him and said, “What if you absolutely had to buy a house in 18 months – what would you do?” The man thought about it for a minute and said, “I guess we could move in with my wife’s dad, pay down our debt and start saving for a down payment.” As he was talking, he starting thinking, “Hey we could do that!” And so they did. Two years later they achieved what they thought was unimaginable. In reality, it was the minute the man let himself imagine it was possible that it all came together.
Moving in with your family or getting married to be able to afford a house may not be the answers that work for you, so start to think about what solutions will work for YOU. Here are some tips to get you started on the path to home ownership.
3 Tips to Get Ready to Buy
1. Set a goal: The trick is to make sure your goal is true to your heart and achievable. Something like ”I want to buy a condo in the Mount Pleasant area by Spring 2011”.
2. Make a Plan: A plan is a list of action steps you need to take to make your goal happen. For example:
· Pay down debt by December 2011
· Save enough for a 10% deposit by Spring 2012
· Make a list of priorities you want in a home (i.e. balcony, near transit, fireplace, den, etc)
· Ask for raise at work at the next review
3. Start Saving: Pretend you own a home now. If your current rent is $1,000, and you figure your mortgage., maintenance costs and property taxes would be $1,650 per month if you owned a home, then start to set aside $650 into a savings account each month to cover your “pretend” condo fees, maintenance costs, taxes etc.
If it feels too tight, that’s a very real indication that you need to make some adjustments to your spending – and you’ll know this long before you’ve signed on any dotted line.
If you can do it, in a year you will have saved $7,800 towards your down payment and you will have had plenty of practice living on the budget of a homeowner!
Sheila is a Money Coach and her aim is to motivate and educate people to take control of their finances. To discover how you can get on track with your own home buying goals, sign up for Money Matters Getting your Financial House in Order Money Coaching Package and find your own way home.
I Can’t Buy a House!
By Andrea Updyke
I loved my apartment. I lived in a fun, walkable area. I had a washer and dryer in my unit and I didn’t have to do yard work. What more did I need? It seemed like enough, but year after year I dreamed of owning my own home. The idea of home-ownership seemed overwhelming. But the longer I rented, the more I had this pit in my stomach that my money was just getting spent. I wanted an investment. I’ll admit, there was a certain amount of convenience and safety in living under someone else’s roof, but it just wasn’t enough.
Me? Buy a house? As a recent college graduate with a pile of student loans and a mediocre income, I certainly didn’t feel like I would be eligible for any kind of quality loan. However, I didn’t want to get a risky loan either because even though this was before the housing bubble burst, I knew enough about bad credit to read the fine print.
Once I started to really consider home ownership, I couldn’t stop thinking about it. Maybe it was the desire for more space, or staking my claim to a small piece of earth. The American dream? Perhaps. All I knew was that if I was going to make this happen, I was going to have to roll up my sleeves and jump in with both feet. I learned a few things in those first few months of consideration that might be helpful for those who may be timid about taking the leap.
Don’t Make Assumptions Based on Assumptions
As a single woman, I think I was programmed with a certain expectation of the order things should happen in my life. Go to college, get a job, get married, buy a house. In my head, I knew things didn’t have to happen that way. I just assumed it would. I didn’t really even consider it any other way. That is, until I found out about a lending program through my city. This changed my mindset completely!
Many cities have programs for first time home buyers that can make all the difference in whether or not you can afford a home. My city for instance, has several different options in which they team up with trustworthy lenders to provide low or no-interest second mortgages. These mortgages assist in reducing closing costs considerably. My assumption was that because I didn’t have a lot of money to put down up front, the only option would be to acquire a risky mortgage with high interest. In fact, this was not the case at all! What I needed to know was where to look for the right information.
Get Creative
It’s no surprise that women often have to be resourceful to get where we want to go. Despite the advances our gender has made in the past 30 years, we still face obstacles of habit. I am often shocked at how little people are willing to ask questions and do their homework. This doesn’t have to be a gender issue, but it definitely can be.
Dig deeper. Utilize every tool you can get your hands on from search engines to city websites and trustworthy news sources. Do you have any friends in the business? As questions! Take charge! Home ownership is an investment of time and heart even before you get the keys. If this is what you want, you can make it happen.
Enjoy the process
There is nothing like working hard and having an end result. Home ownership is the ultimate give and take. From the very first step of finding out if you are eligible to buy a house, to the search for the perfect home and finally moving in your belongings in on closing day, the roller-coaster seems endless. But on that sweet day when you walk in to your house and realize that every decision is yours, every lightbulb is yours, and even the thought of taking the trash (in your very own trash can) to the street excites you, all that effort becomes less of a hassle and more like a gold star congratulating you for achieving your goal.
I have a file. It’s a huge file containing all of my research, quotes, reports, listings, etc. I keep it because I worked hard to get my home. It serves as a reminder that it took a lot of effort to get here and it makes me realize that nothing comes without effort.
That of course, was just the beginning and home ownership is much more than simply closing a deal. But the process of attaining my home is something that I never want to forget. I made this happen. I worked hard and achieved my goal. No one can take that away from me. We have so many resources literally at our fingertips. Make it work for you!
Andrea Updyke is a proud homeowner. Buying her first home as a single woman was one of the happiest days of her life! She is now a wife and a mother and can be found blogging at Lil-Kid-Things
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