5 Ways to Save for a Down Payment

Saving for a down payment isn't an easy task. Many first-time home buyers feel overwhelmed paying such a large sum of money in addition to the various closing costs involved in buying a home. However, you can save enough money for a down payment by following these simple tips and taking advantage of special financing programs. Our REALTORS® have compiled this list of helpful hints so you can save your money for a down payment and purchase your dream home. 

1. Determine the Down Payment Amount
   The first step in paying any down payment is to determine the amount you will owe for your home. The size of a down payment is the result of three primary factors, which includes your initial loan-to-value, the time-frame of the purchase, and the conditions of the local housing market. Most down payments consist of 20% of the total costs of the home, as it will help you lower monthly payments and allow you to avoid paying private mortgage insurance. Once you know the cost of the down payment, you can begin saving up additional money for your first time home purchase.
   
   
2. Pay Off Credit Cards
   Paying off long-time credit card bills is one of the best ways to save extra money for a down payment. Carrying over a credit card balance each money requires you to pay additional interest fees that could be better spent on a down payment. If you have multiple credit cards, it is a good idea to pay off the credit card with the highest interest rate first and then continue to the next highest rate until you are completely free from all credit card debts.
   
   
3. Use Special Financial Programs
   First-time home buyers have a wide range of special finance programs that can help ease the burden of a down payment. For example, you may be eligible to gain financial assistance from government-sponsored programs such as Fannie Mae and Freddie Mac. Various community groups and non-profit organizations may also provide financial assistance for first-time home buyers that struggle with saving enough money for a down payment.
   
   
4. Use Your IRA
   Tax laws allow first time home buyers to use up to $10,000 in IRA funds as an initial down payment. This figure rises to $20,000 with married couples that are both first-time buyers. However, it is important to remember that you will pay income taxes and a 10% withdrawal fee if you less than 59-1/2 years old. On the other hand, Roth withdrawals are tax-penalty free if you have had an account for over five years.
   
   
5. Ask for a Raise
   Sometimes the most effective way to save enough money for a down payment is to ask your boss for a raise. Of course, it is important to do your homework beforehand, as you need to base your request for a raise on your accomplishments instead of focusing on your financial needs. Always showing up to work on time and going above and beyond your job duties is an excellent first step in attaining a raise in the workplace.

Saving enough money for a down payment is a daunting task for many first-time home buyers in the Brighton area. However, Griffith Realty can ease the entire home buying process and help you find the home of your dreams. We have over 35 years of experience in the real estate industry, as we specialize in selling a wide range of Brighton homes for sales. To learn more about the real estate services Griffith Realty has to offer, contact us at any time for additional information.