Tips for Saving For a Down Payment

Realtor® Cheryl Westwood  ~  Lake Havasu City Real Estate 

In this rough economy, it can really seem hard to put any extra money away.  That includes saving for a down payment to buy a new home.  However, it’s not as hard as it may sound.  There are several ways to come up with the money that you may not be thinking about.  Almost all homebuyers today will need to have a down payment to buy a new home. 

Money can help you in so many ways.  If you have enough of it, you have the greatest purchasing power, but not enough will limit that power greatly.  Therefore, many people have turned to alternatives to saving money.  They are going a whole different route and I would like to share some of those alternatives with you.

Alternatives to saving money for a down payment on a home:

* Sell your assets – Sell your most valuable assets, such as jewelry, collectible coins, old cars, etc.  These will be your most acceptable way of increasing the money you have available to a lender.

* Ask for money from a relative or a friend – If you can talk a relative or a friend into giving you money as a gift (not a loan) then you have really good friends and family.  You are allowed a gift of cash up to $10,000 per year without having to pay taxes on it.  Here’s an example: Your mother could give you $10,000, your father could give you $10,000 and your friend could even give you $10,000.  That’s $30,000 total.  You have plenty for a down payment now.  If you do have to pay the money back, you can do so in monthly installments. 

* Borrow against your 401K policy – This is a good option if you have a 401K plan.  You can borrow against it or cash it out.  Just remember, if you borrow against it, this will add debt to your credit and you will still have to qualify for the loan with the additional debit.  Cashing out will probably cost you penalties.

* Ask the seller to pay for closing – Your real estate agent will help you make this offer to the home seller.  They will let them know that you are interested in buying the home, but want them to pay the closing costs.  The sellers will quickly let you know if they will or not.

* Try to get a low or zero point loan – If you are able to snag this low or zero point loan, your closing costs will be greatly reduced.

You see?  All these tactics are just different ways to get you your down payment that you may not have already thought of yet.  Good luck on your home search.