January 26th, 2018 9:40 AM by Mike Herborn
Getting enough money together for a down payment on a house can be stressful, but with an efficient savings plan you will be ready for that down payment without all of the worry.
How much house can you afford?
It is important for you to determine how much of a house payment you can afford before you implement a savings plan. Lenders will calculate your debt-to-income Ratio (DTI) by diving your total recurring monthly debt by gross monthly income expressed as a percentage. Once you know how much of a house loan you can afford, you can figure out how much you need to save each month for that down payment.
Making a plan
A good thing to know is the more you put down as a down payment, the less your loan and monthly payment will be. Here are some of the best ways to save enough money for your down payment:
Set up an automatic draw from your checking account into your savings account every month. Obligate not to touch these savings and keep them building up until it’s time to pay for your down payment.
Review your budget and see what extra expenses you have every month that could be used as savings for your down payment instead.
Try to skip the vacation this year and save all of those expenses for your down payment.
Many family members are eager to help first time home buyers achieve home-ownership and give money in the form of a gift for the down payment. Gifts can come from relatives and sometimes even your employer may be acceptable.
Explore the details of your particular plan. Many people get down payment money from withdrawing from Individual Retirement Accounts or borrowing from 401(k) plans. Be sure you comprehend the tax consequences, your obligation for repaying the money, and possible early withdrawal penalties.
When you have a balance on your credit cards, interest charges will keep accumulating. Cut down this debt and turn this money into savings for your down payment.
Go through your possessions and decide what you actually need and what you might be able to sell. You may own collectibles you can put up for sale on an online auction, or household goods for a garage sale. You might also research what your investments may bring if sold.
While this can be exhausting, the money earned from a second job can help your savings immensely.
Some down payment assistance programs in the Eugene and Springfield area are Eugene HAP, Springfield SHOP, NEDCO IDA, and Grant Programs. And if you are not from the area, research your local down payment assistance programs.