How To Save For a Down Payment
8 min. read by Jason Gelios REALTOR/Author
Here are some tips on how to save or obtain money for a down payment on your next home.
Tap into savings
Tapping into existing savings can help you obtain a home by lowering the risk for the lender. Often times this relates to a better interest rate and payment.
Many down payment assistance programs and government options are available. These programs tend to favor first time home buyers. Ask your lender or real estate professional about what options are best for you.
Cut your living expenses
Do you really need that subscription for NetFlix? Cutting unnecessary expenses can help you save faster for a down payment.
Generate more income
Getting a side hustle or a job that pays more can be a great way to get additional income for your down payment. After all, having extra money never hurts.
While this should be a last resort, obtaining money from family or friends can help you get your down payment faster. Just make sure you are in a position to pay it back if it is not a gift from them. If it is declared a private loan, then have an agreement drafted up so that both parties are on the same page.
If you are selling a home and you have sufficient equity, you can use that money towards your down payment on your next home. Remember to calculate how much you will walk away with after closing minus your selling costs and mortgage payoff.
Withdraw from your 401k
This is a good option to jump start your home purchase. Be sure to know the terms of borrowing from your 401k.
Family members can provide gift money to a home buyer. The lender will want a letter of explanation stating this is a gift that will not be required to be paid back. Many times parents like to help their child purchase a home without co-signing.
Cash out investments
Investments can be a source of money for a down payment. If you are working with a financial advisor, ask them what the best route would be.
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Jason Gelios is a Husband and Father. After that, a Top Producing REALTOR®, Author of the books 'Think like a REALTOR®' and 'Beating The Force Of Average', Creator of The AskJasonGelios Real Estate Show and Expert Media Contributor to media outlets across the country.