Before most of us can get to the point of house hunting and comparing lender offers, we have to make it past the initial hurdle of saving enough money for a down payment. With tighter lending requirements now the norm, the standard 20% down payment is back in vogue. For a $250,000 house that’s no chump change at $50,000.
The good news is that there are tons of ways to save money out there for a down payment – and we want to hear what you are doing to reach that goal. Are you putting your money into a special savings account? Putting off buying a new car or maybe even adding up dollars and cents by making a take-out meal last three servings? To get you started, we put together a few ideas from some personal finance bloggers and other resources:
1) Find little ways to cut your expenses. Look for ways to snip away at your monthly expenditures and put the difference in savings. The blogger at “Lesley’s Journey Towards Home Ownership” has lowered her cell phone bill, and is focusing on lowering her electricity bill. She also plans on clipping more coupons. She has been working on getting her budget in order for several years now, and is considering buying and restoring an old home.
2) Find big ways to cut your expenses. You don’t have to rob a bank to pocket some bigger-sized savings for a down payment. Sometimes, it’s about being willing to take a (legal) chance. I got a great break on my living expenses when I moved 30 minutes south of San Diego to Tijuana. I also lived with my parents for two years when I worked for a university in Los Angeles. Both decisions came with their rough patches, but also provided me with cherished memories.
3) Get a second job. Sometimes cutting expenses just isn’t enough. The blogger at “My Financial Objectives” writes that he is working towards setting aside $27,000 within seven months to put a down payment on a home. He figures he can reach this goal of his extra income bring him an additional $1,500 per month after taxes. He might get some inspiration from the blogger over at Deliver Away Debt, who got a second job delivering pizza for several years!
4) Don’t turn down gifts. If you are fortunate to have a parent or family members who has some spare cash and wants to help you out, this is one way to help make a down payment more feasible. Make sure everyone understands the potential tax implications of lending money to family.
5) Stay focused. Having a specific dollar amount in mind can help you be more accountable in reaching your goal. The blogger at “Punch Debt in the Face” has decided to aim for a down payment of $100,000, and has set a timeline for reaching that goal with his wife in about 3-5 years.
Photo: Alaskan Dude, via Creative Commons 2.0.
By Anna Cearley, Social Media Director LendingTree/Tree.com
Please share with us your own strategies for saving for a house down payment (past or present):