If you’re in the market for a house, the down payment is probably a heavy weight on your mind. The good news is that there are ways to alleviate that weight. Here are just a few tips and tricks for lowering and even eliminating your down payment costs.
1. Pay Off Your Debts
It’s easier said than done, of course, but make a concentrated effort to start clearing the red from your ledger. Not only will it leave you with more money to spend on your dream home, but it will also increase your credit score and improve the rates that you’re offered on home loans. It’s worth the trouble of getting on the phone and sorting out your financial backlog.
2. Lower Your Initial Down Payment
Gone are the days when down payments had to be 20 percent of the house’s value. Today, you can get away with handing over as little as 3-5 percent. It isn’t without downsides, of course; you’ll have to pay for mortgage insurance since you’re putting so little down, and that’s ultimately more money out of your pocket. But it’s a solution if you’re really strapped for cash at the moment.
3. See If You Quality for Special Savings
Veterans can receive big breaks when it comes to down payments. As a matter of fact, if you qualify for a loan backed by the Department of Veterans Affairs, you might not need to make a down payment at all! Rental companies like Invitation Homes have also been known to offer special deals to tenants who want to buy their houses outright. Be sure to explore all of your options.
4. Start Saving Automatically
People have poor saving habits when they rely on their own self-control. Instead, take the decision out of your hands by setting up an automatic transfer from your checking account to your savings account each week. Many banks offer this service for free, and it will allow you to accumulate savings without even thinking about it.
5. Get a Gift
If your grandma wants to help you with your down payment, let her. She’s allowed to give you as much as $14,000 as a “down payment gift” before she’s required to pay taxes on it. The downside to this is that it has to be a true gift and not a loan, and the Federal Housing Administration will require documentation to prove it. If you’re willing to jump through these hoops, however, you can get a big chunk of change from your relatives to apply towards your dream home.
6. Ask for Help
There are both local and federal assistance groups that can help potential home buyers afford their down payments. They’re often need-based, so you’ll have to fall under certain household income limits, but they’re a great way to take some of the pressure off your bank account. At any rate, there’s no harm in asking. The worst that these groups can do is say that you don’t quality, and you’ll be no worse off than you were before.
These are just a few strategies for affording your down payment. Whether you’re going through the Invitation Homes company or somewhere else entirely, let these tips help you with your house-hunting finances.
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