Cliff and Cindy Leinonen Team's Blog
One of the challenges that individuals and couples face when buying a house is finding the money to put toward their mortgage down payment. Since you'll work with a lender to cover the balance of your mortgage, taking on another loan to cover your mortgage down payment may not be what you want to do.
Build your mortgage down payment early
The sooner you decide to buy a house, the sooner you can start cutting back on spending and increasing your savings. This single move keeps you from taking on unnecessary debt. It also teaches you better money management skills.
Expenses that you could trim or cut out altogether to improve your savings include clothes, tickets to live entertainment events like concerts and stage plays and jewelry. Money spent on eating out at sit down restaurants, out-of-town trips and electronics are other expenses that you could cut and invest in your savings.
In addition to cutting back on spending, following are more ways to find more for your mortgage down payment. Use three or more of the steps to make it easier for you to build $10,000 or more in savings.
Open separate bank account - Start a bank account that you use solely to invest in your mortgage down payment. This bank account should not be attached to a debit or credit card. Use the account strictly to deposit money for your down payment into.
Pay off accounts that require you to pay interest - Examples of these accounts are credit cards, computers and furniture accounts that attach interest to your payments. Definitely, pay off high interest accounts as soon as possible. You could make payments 10 or more days before they are due to reduce the amount of interest you pay on the accounts. Similar to how American Express works, try to pay off your total credit card balances within 30 or 31 days. Some credit card companies charge higher rates if you keep balances on a card for two years or longer.
Invest in certificates of deposit (CDs)- If you have an IRA or 401(k), consider working with your financial advisor to purchase CDs. You'll get a bigger return on CDs if interest rates increase.
Contact state housing agencies - You may be able to get financial assistance from state housing agencies. This help may come in the form of grants or loans. To avoid taking on debt, opt for the grant path.
Sell products and items - Raise money for your mortgage down payment by selling clothes, shoes and household items that you don't use. Online resellers are just one avenue that you could use to raise money by selling items.
Freelance or take on contract work -The freelance community is growing. All you need is a computer and a skill to start earning money as a contractor. Jobs you could take on as a freelancer include web designer, writer, virtual assistant, life coach or consultant. You could also find money for your mortgage down payment through gigs with taxi and transportation companies.
Despite your current financial situation, you can grow your savings. You can find money to put toward your mortgage down payment. To successfully save your mortgage down payment, you need to focus. You need to track your monthly expenses. If you're striving to become financially disciplined, you may need to track how much you spend on a weekly basis.