Owning a home is something that a lot of people dream about. For some, the dream is attainable without too much hassle. But for others – and probably the majority – it can be hard to even get together a down payment for the house they’ve been thinking about. Aside from scrimping and saving, there are some unusual ways to get a down payment together that you may not have considered.
5 Down Payment Strategies for Your New Home
Pay off your credit cards first. While this may seem like you’re spending money rather than saving, getting rid of debt helps you keep more of your money in the long run. Debt costs you money in interest and weakens your credit score. Try the “Avalanche Method” when it comes to debt and prioritize the debt you have to figure out which bill gets paid first and fastest.
Apply for down payment assistance. There are a good amount of programs available that offer help for someone trying to pull together a down payment. These are not as straightforward as getting a loan or a mortgage, but they also don’t plunge you into more debt. Look for programs in your state or city and see if you qualify. You can also get a free homeowners insurance quote after you’ve gotten your down payment so that you’re not spending money you don’t have just to find out how much it’ll cost to protect your home.
Get rid of some stuff. Selling your possessions might not get you your whole down payment but it can certainly help. Most people have too much stuff and a lot of it goes unused. Instead of letting it gather dust, give it a second life and get yourself one step closer to being a homeowner. This will also make moving easier when it’s time for you to pack everything up and lug it over to your new home!
Look for a second job to supplement your income. Chances are you’re already working pretty hard to get your future together so don’t think of a second job as a permanent thing in your life. Getting a second job to help towards a down payment is only a short-term adjustment. And there are even jobs where that’s all they want from you. If you have temp agencies in your area, sign up with temp agencies so you have access to jobs that might only need someone for a few weeks or only need someone part time. It can be stressful to add more to your plate. But when you’ve got a goal in mind, it’s best to keep focused on that and know that it’ll be worth it when you’re sitting in your own home.
Tap into your finances. Do you have a plump and healthy IRA? Did you know that the IRS lets you use up to $10,000 in IRA funds as a down payment on your first home? Even better is that a married couple can pull from each spouses account. That’s $20,000 lock and loaded! Of course, this option isn’t for everyone. If you only have a small retirement account, it’s probably better you let it grow before taking money out. You also need to qualify as a “first-time buyer” of your home to avoid a 10-percent early withdrawal penalty.
Being a homeowner might be a whole new chapter for some people, one with challenges and costs they didn’t see coming. Remember, owning a home requires maintenance, patience, and insurance. Fortunately, a free homeowners insurance quote is readily available. As for the other two, you’ll have to find those yourself but after getting together a down payment, you can do anything.