Your first home is special. It’s where you’ll create memories, establish traditions, and possibly raise a family. But before you can unlock the door to the home of your dreams, you must secure the minimum down payment. For 60% of home buyers, a mortgage down payment comes from savings. So, if you’ve already adjusted your spending by eating out less and cutting the cable cord, you’re on the right track. However, if your savings efforts aren’t adding up as quickly as you’d hoped, it’s time to try something different.
Add a bit of creativity to your disciplined savings efforts, and you can reach your down payment goal sooner. Start with these helpful tips.
1) Bank Your Financial Windfalls
Help your down payment fund grow faster by depositing money into a separate interest-bearing money market account. Consider depositing the following cash windfalls into this account:
- Federal income tax refund checks
- Loan repayments from family or friends
- Financial gifts from relatives
- Funds from an inheritance
- Annual employee bonus
You may also have money waiting for you to claim. If your household income is below a set amount and you meet other requirements, you might be eligible for a renter’s rebate equal to a percentage of the rent paid in a calendar year. See Vermont’s Renter Rebate Program or check your local municipality’s website for details.
Don’t forget to search online for unclaimed property or money. The National Association of Unclaimed Property Administrators website helps rightful owners collect money and property from state governments, financial institutions, and other companies. There may be free money just waiting for you to claim it.
2) Exchange Preferences for Needs
If your down payment fund is growing at a slower pace than you’d like, find ways to reduce expenses for the most significant impact. For example, instead of canceling your cable service, which may result in savings of less than $100 a month, consider downgrading your ride to an older model to lower your auto loan payment. If your new car is worth more than the loan balance, you may be able to trade it in and use the equity toward a used vehicle with a lower monthly payment.
3) Make a Housing Change Now
Find a roommate to share your current housing expenses. How much could you save each month by cutting your rent and utility payments in half? Check with your landlord first since adding a roommate might require prior approval. Alternatively, consider moving into a smaller unit with lower rent payments. Know that the sacrifice is temporary and will help you get into your dream home sooner.
4) Review Your Compensation
While working overtime or securing a second job can build your savings quickly, those options require a substantial time commitment. A bump in pay at your current job could produce similar results without the extra time. Before speaking with your employer, research your job title by visiting salary comparison websites. Are you being compensated appropriately? If not, present the data, along with a record of your recent professional accomplishments, to your employer. If you’re able to show your value in the marketplace, you might be able to negotiate an increase in pay.
You may not require as large of a down payment as you might think. Vermont Federal Credit Union offers first-time home buyer mortgage programs that can reduce the costs needed to close on your first home. Our 97% LTV (Loan to Value) Residential Loan Program only requires a 3% down payment. We also offer Seed Money, a mortgage assistance program that can cover up to $7,500 of your down payment and closing costs.
Call us today at (888) 252-0202 to learn more about these and other mortgage loan options.