After a long search, you’ve finally found the house you’ve been looking for—and at a time when mortgage rates are low. But you don’t have enough money for full payment—and not even enough for a down payment. Saving money for a down payment can be tough for people on a lower income.
But you don’t have to let the dream of owning your own home evaporate into thin air. You can work towards getting the cash ready for a down payment.
In this piece, we’ve provided some ways to save money—whether you want to find enough to make a down payment on a home, buy a car, take a vacation, or save for your retirement.
When you owe money on your credit cards, the compounding interest charges make it difficult to clear that debt. Slash your debt load and keep that cash for yourself. List your debts, then pay off the balance on the card with the highest interest rate first. Once that’s cleared, focus on the card with the second highest rate. In this way, clear your entire card balances. This is usually known as an “avalanche” method of clearing debt. By clearing those credit card bills, the way is open to saving some money instead.
Many first-time home buyers struggle to save for a down payment. If you are one of those, there are many several programs in the market that can assist you. Some government-sponsored agencies buy mortgages and package them as investments. Also, some non-profit and community groups can support buyers who are trying hard to save money for a house. Moreover, there are also state agencies that can also help.
Tax laws will allow you to withdraw some money from your IRA funds. If you are married, then you can withdraw from your retirement account, meaning a solid down payment. Under the tax rules, you qualify if you have not owned a principal residence during the three years prior to buying the new home. Under these circumstances, the penalty for early withdrawal is waived, but you may owe tax on the money, depending on the type of IRA.
When you are receiving a sofa or any furniture piece you might think you need to fill all open space with too much furniture, but you don’t have to. You can find other alternatives like placing a mirror on the wall or adding a shelf in front of the wall. You can also add a painting to the dining room wall.
When your salary is hiked, save that increase in a separate savings account. It seems like a small amount, but it will soon add up. Also save any bonuses, extra sales incentives, or tax refunds in this separate savings account.
If you and your spouse both have a car, sell one, share the other, and get rid of one car payment instalment every month, as well as maintenance and insurance costs. You could save thousands of dollars per year this way.
First-time home buyers, particularly those on a lower income, often find it hard to save the money needed for a down payment on their dream home. Buying a home is probably the biggest purchase we make in our lifetime and it’s not always easy to save with this in mind. But if you’re looking to purchase a home in the near future, now’s the time to start saving for a down payment.