Creative Ways to Save for a Down Payment
A down payment is necessary if you want to go from renter to homeowner. The average down payment for a home costs between 3% to 20% of the purchase price. 56% of borrowers with a mortgage paid less than 20% down, but it's still a challenge to save enough money to cover a downpayment for buyers all over America.
Here are some creative ways that you can save money for a downpayment on the house.
Place A Fixed Amount Of Money In Savings.
It's possible to save money on your down payment by taking the time and planning.
The old-fashioned way of saving for a downpayment takes time. A down payment is a target that can change quickly, so saving up for it over several years might not work for you if your goal is to buy a house as soon as possible. With the changing market, house prices can go up, and the minimum Down Payment requirement may rise. You can make your savings grow more quickly by opening a high-interest savings bank.
Sell Your Unwanted Items
Spring cleaning is always a good idea, regardless of the season. It's possible to make lump sums of money by selling your old clothes, furniture, and electronics. Many websites can connect you with buyers, depending on what you're selling. If you don't like selling online, you can always have a garage sale or yard sale.
Your Cost Of Living Can Be Reduced
It might take a while to downgrade your space and reduce your monthly rent payments. However, this could help you save more money each year for your down payment. To save money, it might be possible to downgrade from a 1-bedroom apartment to a 2-bedroom studio.
Change your partner to reduce your cost of living. You can reduce your rent by having a roommate. If you have relatives or friends with spare rooms, you may be able to pay very little to no rent for a few weeks by sharing the space.
Your Monthly Expenses Can Be Reduced
Do you really need 60 more channels as part of your cable package or not? Do you have the option to reduce your internet speed? Are there subscriptions that you can live without? Although these subscriptions may not be ideal, you should make some concessions to help save for a downpayment. Reducing your recurring monthly payment could help you save more money. Make sure to set aside the money so it doesn't sit in your account and appear as if you could spend it.
Small Lifestyle Changes Can Be Made To Reduce Spending
Although the happy hour is a great way to have fun after work or to the movies on weekends, it's a good idea to cut back on extracurricular activities to make more money. For example, instead of going out to see the movies, rent one or watch one at home. Also, if you don't like the social aspect of going out, invite your friends over to play a game.
A spend-free weekend is one way to reduce your monthly spending. Try not to spend even one dollar on the weekend during the month. It may surprise you at how much you can save on a single weekend.
Ask For Cash Gifts
Apart from cutting down on your spending, you could also try to raise funds through gifts. Many homebuyers have had luck asking family and friends for cash gifts instead of birthday gifts, wedding gifts, or gifts for other occasions. In 2020, 40% percent of mortgage buyers borrowed money from relatives to help finance their down payment.
An Additional Source Of Income
A side job can bring in more income if you are willing and able to work extra hours on weekends or after your regular job. For example, you could consider dog walking, house sitting, waiting tables, or selling handmade crafts online to your co-workers or friends.
Assistance With Your Down Payment
Saving for a downpayment is not something you can do on your own. Some mortgages and buyers are eligible for Down Payment Assistance Program. These assistance programs can be loans or grants and are often funded by local governments.
