Coming Up With A Down Payment For A Home

Often the hardest part of buying a house is coming up with the down payment. If it helps any to know, many years ago in the early 1900′s lenders used to require a down payment of 50% of the value of the home.

Today the average is 20% and sometimes less. While that’s a lot better than coming up with 50% of the value of the home, in most cases the average person doesn’t have that amount of cash readily available to them.

Luckily there are some mortgages that require less than 20% down also and if you qualify for those lower down payment types of loans it’s a definite plus for you.

However, it still comes down to needing money for a down payment one way or another. Most of us don’t have someone to simply hand us a large sum of money so how can you come up with a down payment for a home?

If you have issues with saving money and putting it away regularly then start using your tax refund to begin your housing fund. If you don’t normally get a tax refund, change your exemptions to 0 and in some cases you can even have your employer take out an additional few dollars out each paycheck.

At tax time you should get a “refund” from the IRS and you can take that money can automatically stash it into either a bank account or a holding fund such as a short term CD, etc. that you cannot easily access.

This means no debit card to grab the money and make it so you need more than one signature to get the money out which will make you think twice before touching that savings; knowing what you’re saving for is worth the wait.

Find a way to make a second income. This could be anything from selling items you have or find at garage sales and auctions on eBay or having a couple garage sales over the summer months. You can also look into things like indoor flea markets and see if you can buy a space occasionally or if you must rent one for a length of time.

You can also use Craigs List and local email groups that sell items via email. Pictures of the items are a must if you’re doing any online selling so make sure you have at least a camera phone to take pictures and upload them. Finding items to sell isn’t all that hard.

Locally we have a weekly auction house where you can pick up entire lots of items for just pennies on the dollar. Check out local estate sales in your area, garage sales, and even local flea markets but make sure you know what you’re buying and that the items you’re buying are truly something that will sell.

Just because you think this unique monkey light is so cool doesn’t mean it’s something that most people would want; then again if it’s unique you may have a market. Try to pick a general area that you work with and get to know better and better as you work in that area.

For example if you enjoy old dishware and glass knick knacks, antique or collectible glass ware then try to buy mostly those items. If you’re into music then stick with music oriented items, posters, CDs, memorabilia and such.

You can get into a couple areas but try not to do a mish-mash of items unless you really think you can sell them in your area or online. Becoming an expert in a certain area will help you know what to charge and what it’s worth as opposed to just offering a bunch of items not knowing what anything’s truly worth.

You can also do some moonlighting as they call it and find work via the internet doing things like secretarial/assistant work or utilizing your computer skills to help build websites, etc. If you’re handy with fixing things perhaps you could do lawn mower repairs or seasonal tune-ups in the spring and beginning of summer. Even offering to cut lawns or shovel walkways and driveways can be an option but remember you have to be careful to be insured in some cases in case of injury.

Make sure you know the laws before working for someone else on their property. Start a small handyman business on the side where you do odds and ends for people you know or get to know by word of mouth. Make sure they know from the beginning that you don’t carry insurance and are working to help them as a friend just to be legally safe.

There are also some jobs like phone operators that direct lines to your house, especially over weekends and after hours for places like doctors’ offices and such. If you look hard enough you can find something to do that will pay you a little here and there; then tuck that money away into an account immediately.

Have your work take out a certain amount each week and deposit it into a savings account. If the money is automatically taken out for you then it’s easier to do instead of trying to make sure when you get paid you place a certain amount into an account.

Also, many employers offer credit unions that they work with directly or banks and if it’s a completely different bank or credit union than you currently use you will be less likely to access the account while you’re hitting the bank. Again, don’t take a debit card for the account and make it harder to access.

If you have $50 a week taken out of each week’s check that’s$2,600 in a year. Do that for two to three years and you’ll have a nice down payment set aside for a small starter home.

Many people see this as a last resort or as an absolute non-negotiable option and that’s fine; however, often older members of your family have had the time to put aside a nest egg. You can ask your parents or grandparents to borrow from them and come up with a rate that you could pay them back.

Many times you can even hold of having to pay them back for the first year until you get on your feet as a homeowner; something you cannot do with a bank or financial lending institution. Of course you should always pay back not only the borrowed amount but any amount they would be making if it were sitting in their savings account also.

Obviously this option is not for everyone and if you don’t feel comfortable or if you have a family that’s often arguing and unstable you may want to avoid the issue and decide saving on your own the hard way is best.

Basically it all comes down to your expectations. You have to be realistic and understand that going from $0 to a couple thousand is not going to happen in a matter of weeks but more so in a matter of a couple of years. Patience is definitely a virtue when it comes to saving.

You can also let it be known to friends that you’re saving for a house and instead of any gifts you’d love to have gifts of cash instead so they can be a part of your dream and helping you reach it.

Of course there are some people who aren’t going to think this is tasteful and will continue to buy you items instead of gifting money but it can help if people feel as though they’re truly making a difference in helping you achieve your dream.

Basically you have to realize that there is no quick fix that will instantly give you thousands of dollars other than if you should have a rich relative who leaves you all their money when they pass or you hit the lottery. Like most things in life, anything worth having takes patience and work.