How to obtain enough money for a down payment
One of the main issues of the up and coming generations is the one associated with their housing options. In fact, an alarming number of young people are finding it too difficult to obtain enough money for a down payment for their future home. With the student loans looming over their heads, they find it hard to even daydream of buying a house. However, many of them are working and are in their mid-twenties. If there was ever the right time to buy a house, that right time for them is now. So
what can they do in order to obtain enough money for a down payment? We are going to try to answer this question for you. Our goal is to try and help you come with a way to make your first steps towards buying a house for your family.
Make a plan and stick to it
If you don’t know where you are going you’ll end up someplace else. This is 100% true. So, if you are unsure how you are going to obtain enough money for a down payment, how are you going to accomplish it? Therefore, the first thing that you need to do is to make a solid plan. First, determine the amount of money that you need for a down payment. Then, choose the steps that you are going to take in order to meet the requirements that you set. Choose from the options below.
Reduce your spending
In order to obtain enough money for a down payment, you need to make sure that you are spending your earnings wisely.
Depending on how much you earn per month, you need to make sure at least a third of that amount stays on your bank account once the month is over. Some may find this too hard. Raising a family and saving money at the same time is not easy. However, if your daily expenditures include spending money on certain, unnecessary, things, you might want to try and reduce such costs.
For example, buying a coffee on your way to work is awesome. It allows you to energize while you are driving. On the other hand, preparing coffee for yourself, by yourself, before leaving your home is much better. It saves money, while it takes about 5 minutes more. Additionally, it is very eco-friendly. You will be saving money while protecting nature as well. Think about whether there is anything else that you are buying on a daily basis that you can prepare by yourself. If there is, you should have enough space for a change.
Get your credit card loan paid off
Talking about saving money, what’s the situation like on your credit card? How often have you been using a credit card? Should the answer be anything other than never or from time to time, the odds are that you owe a bank a certain amount of money. If that is true, then the bank is charging you interest as we speak. If you can, you should pay off that debt as soon as possible. Paying interest on your credit card is not going to get you any closer to owning a home any times soon. Therefore, get your credit card bill even and keep what would be the interest money to yourself.
Get a second job to obtain enough money for a down payment
How many of your friends are working two jobs at the moment? This has, unfortunately, become very popular not only with young people but with the generation of our parents as well. Second jobs like freelancing are great sources of income. If you have a good-paying primary job that provides you with enough money to live on, getting a second job can prove key to your success.
Firstly, it can provide you with a financial boost that you would not need to spend. You could put every paycheck aside and obtain enough money for a down payment. Secondly, the second job can be the source of income that could be used to pay off the cash loan. This way, you could even pay off the loan earlier than what you and the bank expected.
Your retirement plan could launch you into the “homeowners orbit”
Have you ever thought to use your 401k retirement plan to get more? Here’s an idea: you can use this money for the down payment. The best thing about it? You will be borrowing money from yourself and not from the bank. The bad thing about it? You would need to pay off this debt to yourself and the loan that you would get from the bank. Still, this could prove to be your one-way ticket. After all, better to lend from yourself than from someone else, such as a bank for example.
Gifts are an option as well
Have you known that you can use a gift as a down payment as well? Therefore, if there is someone in the family that is very fond of you, you may talk to that person and ask him or her to make a gift for your down payment. If you worry if this is legal – worry not. Tax law allows up to several thousand dollars to be invested this way on behalf of the recipient. Plus, this action will provoke no additional tax for either party. Sounds like a good way to obtain enough money for a down payment.
Complement your down payment with a tax refund
Nothing is certain but death and taxes, said Daniel Defoe and Benjamine Franklin. There is another certainty in this “equation” as well. If you are expecting a tax refund this year, use to bolster your savings. It will take time to obtain enough money for a down payment. Consult your plan and find out when you were due to fulfilling it. If the goal was in a couple of years, tax refunds could prove quite an easy way to come up with the amount of money that you were needing.
Authors bio: Betty White was never quite sure what she wanted out of life, so she explored job opportunities in all spheres of life. That lasted until, five years ago, she found herself in copywriting. Today, she finds herself working with a team of professional writers at Moving of America and doing what she loves