One of the biggest obstacles in the home-buying process is the down payment. The amount is usually set based on the loan type you choose. For example, a conventional loan requires a 3% down payment, an FHA loan of 3.5%, and a jumbo loan of 10%.
However, an Orlando realtor will tell you you need to save at least 20% for the down payment to lower your loan amount. As a result, your monthly payments will lower, saving you from defaulting on the loan.
The question remains: How do you save for the down payment?
Let’s look at some quick ways:
Stash Your Cash in a Savings Account
To grow your money, you have three options: CDs, money market accounts, and high-yield savings accounts. Among these, CDs are the best because they have a penalty for making early withdrawals. This restriction prevents you from dipping into your savings.
You need to have a timeline for saving the down payment. Consider getting an 18-month CD. This way, you can save enough for the down payment and other expenses and even buy the house earlier.
Search for Assistance Programs
As a first-time homebuyer, you can access multiple down payment assistance programs. You need to meet a certain income limit to be eligible, and the government will assist you in securing a small amount to get you started.
Downsize Your Car
If your office is close to your apartment, consider downsizing your car. You can sell it for a smaller one with lower insurance premiums. Not only will this move help you save on fuel, but it will also allow you to put a sizeable amount in your CD for higher profit. There’s also the option of using public transport. Compare cost and convenience to find out which way to commute is better.
Sell Your Valuables
How long have you been dreaming about becoming a homeowner? Are you willing to do anything it takes to turn it into a reality? Then assess your valuables and set aside those you are not emotionally attached to. Sell them on Craigslist and increase your savings.
Start a Side Hustle
No job is beneath us! From helping your neighbor mow their lawn to babysitting their kids, you can look into plenty of side hustles to save for the down payments. Here are some ideas:
- Drive for Uber
- Babysit
- Pet Sitting
- Dog Walking
- Clean Houses
- Become a Tutor
- Do Freelance Work
- Give Music Lessons
- Shovel Driveways
- Wash Cars
- Do Yard Work
If it takes too much time to save for the down payment and you feel like you are wasting money renting, ask your family members to help you. They can float you some funds as a gift letter, which you must show the lender.
Some people are unable to save 20% for the down payment. If you fall in this category, Megan Dowdy Realty will help you contact a qualified Sanford, Florida realtor with connections to lenders who might be willing to give you a bigger loan at an affordable rate. For more information, call 407-509-9279.
