Many of us dream of owning our own homes – and that first one will always give you the most extraordinary feeling. It’s a sign of being independent and taking control of your own future. However, there’s always one hurdle that plenty of people struggle to get over: having enough money for the down payment.
Are there options out there to help you if you’re one of those who are looking to get a down payment for their next home? The good news is that there are – here are some of those choices you may want to consider.
Put money away
The secret to getting your savings to grow is to make identical deposits at the same time each month. So, you could arrange for an amount of your paycheck or from your checking account to go straight into your savings account every payday. For example, you could save $200 from every paycheck – so if you’re paid every fortnight, then you will have saved $5,200 (excluding interest) after just a year.
Save your tax refund
If you find it challenging to save, then you could consider changing your income tax withholding exemption from one to zero. This means that your employer will pay more of your paycheck to the Inland Revenue Service (IRS), which will likely mean that you’ll receive a good income tax refund. However, a regular tax income refund may also be enough for your down payment.
Have a look at government programs
The government may run some down payment assistance programs for first-time buyers that you might be eligible for – like this home buyer’s plan. Also, have a look in your local county area to see if there are any select programs to encourage buyers to purchase homes in specific neighborhoods.
Borrow from your retirement accounts
This will depend on your situation, but you could, for example, borrow against your 401(k) – so you will repay the principal and interest on the loan to yourself, rather than a bank. You’ll still have to repay the money you borrow, as you would with a loan, and you might have to repay the whole amount straight away if you lose your job. However, if you have a stable job, then you may want to consider this option.
Pay off your credit card balances
Depending on the balance you have on these and the interest rates you have, then you could be paying hundreds or thousands of dollars on this every year. Once paid off, this cash could go towards your down payment.
Use your inheritance
If you have a decent inheritance, don’t let it go to waste. Making this as your down payment on a home will be a safe and smart way to make this an investment.
Sell your items
There are plenty of places where you can post your items for sale to people that don’t live that far away from you. It might take some effort to do this, but you’ll be surprised at how much money you could make on these belongings.