Easy Ways to Save for a Down Payment

Despite some of the more common challenges we see with large student debt, down payment, saving money, and the price of homes. I still see a strong desire for Americans to own a home. Recent studies have shown a growth in our housing market, but there is still factors that hinder home ownership.

According to this press release, by Harvard University’s Joint Center for Housing Studies.

The national housing market has now regained enough momentum to provide an engine of growth for the US economy

I believe Americans still want to own a home. I believe it is a great thing about growing up in this country. Sometimes it just takes a little extra motivation and education to realize your goals are within reach.

Have you considered just simply… saving? Lets look at the three main areas:

Make A Budget For Your Down Payment

Budget 101 will tell you that before you even consider saving, you need to figure out what you are trying to buy. In this case, you are trying to figure out how much house you can afford. Our website actually has a mortgage calculator on the bottom of the home page, and numerous bank websites do the same.

I have seen the general range of average home price in Riverside around the 325,000-350,000 range. For our example lets use $330,000*.

 

As you can see, putting down 20% can be extremely hard as first time home buyers, even if you are just looking for an average priced Riverside home. Just know that options are out there for you. Take a look at this article:

Link: “7 Programs That Help First-Time Homebuyers”

Save

This is probably the easiest one to say and the hardest to do. The reality of this means that people are going to have to make drastic life changes to achieve these savings. I have heard every story out there. Some people will move into a cheaper apartment or live with their parents for a year. The short term change is worth the investment and life long benefits of owning a home. At least for some people.

Others have eliminated all “fun” from their budget. No eating out. no unnecessary purchases. It is easier to do this when you set a automatic despot right in your savings account.

Whatever method you pick or are comfortable doing, it needs to be a plan with action and attainable goals.

Buying With Everything You Have? ( be careful!)

If you have been putting money into an IRA account, you can actually take money from it without a penalty if you withdraw $10,000 for a first time home purchase. With this money, savings, maybe some money from your parents/gift, you can come up with a sizable down payment.

What is the downside? That 10k you took out over 40 years would turn into $150,000 of tax free money. Assuming a 7% annual return. The money adds up considering your spouse might be doing something similar. I would highly recommend talking to a professional before you dip into an IRA account.

Lots of money experts will recommend just cutting down on retirement savings for a short period of time. Instead of taking money out.

The last thing you want to do is use everything you have towards getting a home. Draining retirement accounts and savings is not smart if you have nothing left for general repairs, fixes, or life in general.

Is it Important to You?

At the end of the day, it really comes down to how badly you want to own a home. Would you be filling to sacrifice for a year or more to get into a home? Can live on a budget for a set period of time? Do you need to repair your credit?

Owning a home is still very possible today. What did you do to get into your first home? Let us know in the comments below!

By | 2017-06-06T11:16:04+00:00 August 4th, 2016|Buyers, Finance, Tips|0 Comments

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