5 Ways to Save for a Down Payment
5 Ways to Save for a Down Payment
The median home price in the Bay Area real estate market rose to $865,900 in January, according to The Mercury News. For first time home buyers, that means saving more than $173,000 for a 20% down payment. Thankfully, Provident Credit Union offers mortgage loan programs that require much less than that. Still, even for buyers who qualify for 5% down programs, that means saving nearly $45,000.
That’s a lot of money, but buying a home is one of life’s most important milestones and the largest purchase – and investment – most people will make in their lives. It can takes years to save up for such a big purchase. Here are 5 tips to help you get going.
1. Be clear on how much you need
Many lenders, like Provident Credit Union, offer conventional mortgage loans with down payments that are less than 20%. In fact, we have a number of different mortgage options that feature down payments as low as 5%. Our friendly and experienced loan officers can help you decide which loan is right for you, how much house you can afford and how much of a down payment you’d need. You can also attend one of our free home buying webinars to learn more about exactly what you need to do to prepare for buying your first home.
2. Reduce debt
If all of your paycheck goes toward paying bills and debt, you’ll never make any progress toward your goal. And, if you have a lot of outstanding debt, it could be difficult to even qualify for a mortgage loan. Refinancing your debt into one consolidated amount can accelerate your debt reduction goals. Provident Credit Union helps members reduce their existing debt all the time. Ask us how we can help improve your financial position.
3. Use technology
These days, there are plenty of ways technology can automatically save small, relatively unnoticeable amounts from your budget. At Provident, we offer the Round Up Savings program, which rounds your debit card purchases up to the nearest dollar and transfers the difference into a savings account. You can even add on an extra dollar or two per transaction, as well as a larger amount at the end of each month, to help you reach your goals even faster. What’s more, we will match 100% of your eligible round up transactions for the first three months. And, we will match 5% of all future transactions up to $250 per year.
4. Get a side hustle
There are many ways to earn extra money in today’s contract employee economy. If you have office and social media skills, consider a job as a virtual assistant, helping a small business owner with administrative duties. If you’re crafty, you can sell your creations on Etsy or other online platforms. Of course, there are the obvious money makers like driving for Uber or walking dogs. The point is, there is always extra money to be made for those willing to hustle. And the more you hustle, the faster you’ll be in your own home.
5. Stop the bleeding
Many people have “bleeders” draining their budget – purchases that you’ve forgotten about that are withdrawing money from your account. For most people, these are automatic subscription services like streaming channels or clothing subscriptions that you don’t use or need. Others pay too much for insurance and could renegotiate. For example, if you no longer use your car to commute into the city, your insurance premiums could be much lower. Review your account statements and be honest with yourself about which ones you truly need. Some companies will allow you to pause your subscription for a few months or even indefinitely without having to cancel completely.