According to a U.S. Mortgage Insurers report, most homeowners take up to 21 years to save 20% of mortgage down payment. There are innumerable factors that contribute to the negative saving rate. However, there are some alternative options that can assist homebuyers in saving more faster.
1. Obtain a Mortgage Down Payment Gift from your Family or Friends
Your family members may have disposable income which they can lend you at zero or little interest. Approach them and request if they are willing to offer you the down payment gift.
Most real estate mortgage companies consider the funds as exchange funds between the buyer and family or friend. The company puts the funds as part of the down payment money.
However, some mortgage companies have restrictions on who can gift you the money. Consider talking to your lending company before the transfer of the money.
2. Make Adjustments to your Home Budget
It is worth noting that houses with reduced sale prices will mitigate for reduced mortgage down payments. Your lender should have flexible options that are within your financial capabilities.
When making the adjustments ask yourself the following questions:
- How much am I willing to spend on the home?
- What is my disposable income?
- How much can l save on the down payment?
3. Lower Your Expenses
Arguably your personal, medical, or housing expenses are the major restraints for concrete savings plans. If you can manage to cut down your costs, you will be better positioned to save for the down payment. Some expenses you should consider cutting include:
- Gym costs
- Clothing expenses
- Eating in high-end restaurants
- Grocery costs
Redirect the money you were previously spending on unnecessary or luxury items to your mortgage down payment. After a few years of persistent saving, the results will be remarkable.
4. Think About Getting an Extra Job
If you are in a position to siphon money from different channels, you are a step closer to owning your dream home. Cash generated from the extra jobs should be 100% channeled to your mortgage down payment. You can consider indulging in the following extra jobs:
- Online freelancing
- Online tutoring
- Delivery services
- Renting out your garage space
- Virtual assistant
5. Automate your Savings
Automation gives you convenience and control of your savings. Talk to your employer and request a specific percentage of your earnings to be directed towards a fixed savings account. You can decide never to use those savings for personal expenses and put aside for down payment.
6. Put a Halt on your Retirement Savings
Although retirement savings are integral for your future, you can prioritize buying a home. The money scheduled for your 401(k) can be averted to your down payment.
Alternatively, you can request to borrow against your 401(k) savings for purchasing your home. Most companies allow their employees to use their retirement savings as a down payment for their mortgage.