Saving Toward a Down Payment: 8 Great Ideas

By Barbara Pronin, RISMedia Columnist
Like many consumers today, you may be thinking this is a great time to buy your first home—and you are right. Rock bottom prices, historically low mortgage rates, and a great selection of properties in all price ranges make this an excellent time to buy.

“The problem for many,” noted consumer finance consultant Elizabeth Ray, “is the lack of a down payment. But favorable price and mortgage conditions will likely last for a while. The smart and hopeful first-time buyer will take advantage of the opportunity to save now for that needed down payment.”

For those willing to make a few sacrifices in the short-term, Ray suggests eight possible ways to help consumers watch their savings pile up more quickly:

• Bank the extras – Anytime you get a refund, bonus, commission or birthday check, bank it in a separate savings account.
• Live on one income – Working couples should try to live on one income and bank the other—or half of it.
• Get a roommate – If single and living on your own, think about halving your monthly costs by taking in a roommate.
• Ditch the second car – If possible, use public transportation and bank the sale funds or payments.
• Do without extras – Can you do without cable? Eating out every night? That Starbucks stop every morning?
• Pay off debt – As you pay off high interest debt to better your credit rating, you will also be saving that high interest spend. Try to bank the payments you no longer need to make.
• Ask about a piggyback mortgage – Consult with a mortgage broker. If you can’t quite get the required percentage together for your down payment, but have a high enough monthly income, you may be able to get a piggybank loan to cover what your first mortgage won’t.
• Check out loan assistance programs – Government organizations like Veterans Affairs and FHA offer special programs designed to help people who don’t have large down payments obtain mortgage financing. Also check with state and local housing authorities to find out what assistance they may offer.

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.