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Mortgage:
Your First Mortgage
Save a Sizeable Down
Payment
Take
the First Step to Your Dream Investment:
How to Save a Sizeable Down Payment
Only
recently, you have decided that you are
finally mature enough to own your very
own home. You have looked around your
neighborhood for some potential
good-buys, and thanks to some good
fortune, have found a considerable
number of candidates.
You’ve
short-listed a number of houses and have
made the list even smaller by choosing
your top 3 favorites. Now it’s just a
matter of determining if you will be
able to pay for one of them.
And
with the matter of payment comes first
the issue of a down payment – or more
specifically, the issue of where to get
your down payment. You would really want
to be able to purchase your house as
soon as possible, before the prices rise
and ultimately become out-of-reach. The
question is how are you going to do it?
Ideally, you should be able to pay 20%
of the total price of the house as down
payment. This is an ideal rate for both
the buyer and the lender. At 20% a buyer
will be less likely to give up on the
loan than at 10%, ensuring both the
lender and the buyer that they will be
able to gain from the transaction.
So how
do you get that all-important 20%? Some
people think there’s only one way to
save for that down payment, and that
includes saving a certain amount of
money every day, every week, or every
month, until your savings amount to the
down payment you need.
And
while the above-mentioned method is a
sound way of saving, you shouldn’t be
limited to it: there are a number of
other ways that are less time-consuming
and just as effective in helping you
overcome that down payment hurdle that’s
keeping you from your dream home.
Read on
to get some useful tips on how you can
save a sizeable down payment.
Tap
Into Your 401(k)
To get
that down payment, you can tap into your
401(k), which you will have to pay over
a period of five years or more, with
interest. This method, however, has both
advantages and disadvantages.
One of
the advantages of getting a loan from
your 401(k) is that it is not considered
a debt by lenders when they assess your
debt qualifications.
A major
disadvantage of loaning from your
401(k), however, is that should you have
or decide to leave your current job, you
will have to pay the loan in full 90
days before you quit or you are
officially terminated.
Ask for
the Help of Non-Profit Organizations
Individuals with a low to moderate
income may ask for the help of
non-profit organizations that have
programs which are aimed at helping
people get the opportunity to buy their
own home.
Some
organizations have volunteers who
rebuild old houses, and afterwards tie
up with lenders who offer low-down
payment or no-money down loans for
buyers. Some also require that potential
buyers invest on their homes with “sweat
equity” – that is, by helping in
building their own home as well as other
people’s homes.
Mutual
Funds
If
you’re willing to wait a few more years
to be able to get a down payment for a
house, you can consider investing your
money in mutual funds and time deposits.
Ask the help of a financial adviser to
help you decide where your money will
get the most returns.
Control
Your Budget
If you
still plan to take the
save-until-I-have-enough route, then
here is a very helpful tip on how you
can save more effectively for that down
payment.
Write
down everything you purchase. Don’t
leave anything out – even if it’s a
small candy bar that cost you a dollar.
Do this for a week, and afterwards
assess your spending habits. See what
you can improve on, and what expenses
you can avoid. Divide your expenses into
categories and allocate a certain amount
of money for each category.
Ask the
Expert Advice of Your Realtor
If
you’re really set on buying a house,
perhaps it’s best to look for the
services of a realtor. He will be able
to give you expert advice on the best
way to pay for your house. Just be sure
that you have a trusted and credible
realtor.
With
the right determination and the right
method that’s most suited to your saving
and spending habits, you’ll definitely
be able to save up for a house of our
own.
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