A down payment is probably one of the most important things when taking out a mortgage, buying a car or anything else. How much you put down somewhat determines your relationship with the lender and how high / low your rates will be. It may be tough for some to find money for a down payment but with some effort, you'll have it in no time. Start off by saving all of your spare coins and bills, it adds up!
Do you really need that double-double from Tim Horton's or a pack of cigarettes? Saving all your spare change could have you a down payment before you know it. To put it into perspective, let's say a pack of cigarettes costs $ 10 and lasts you two days. In one year you could save $ 1825. Save your extra change, start a piggy bank and drop your daily loose change into it and you'll have a good addition to your down payment sooner than you know it.
Pay a visit to the Bank of Mom. That's right, parents wanting the best for you probably could not be happier than to loan you some money to buy a home. Now, taking advantage of your parents' love is not right so remember to pay them back or it may be the last loan they give you. Getting a loan from parents, a family member or a friend is much easier than applying at a bank since there are no qualifications or credit checks. You just have to be trusted to pay them back; treat it like a loan from the bank. Records show that about 36% of first-time home buyers needed some help to get a down payment – 27% from family and 9% from friends.
Banking institutions and governments are more than likely to have lending programs to secure a down payment. By looking around for a bit, it's a sure thing to find at least a few lenders who are willing to lend you a down payment. Just do not let the down payment loan collide with your mortgage payments and make sure that you can afford both.
Another way to save for a down payment is to save your tax refunds. The average tax return is around $ 3000. Instead of taking that vacation or buying new furniture, saving that for a while and letting it build interest can help you a lot in finding your down payment.
Typically, a down payment on a home can range anywhere from 3.5% to 20%. It demonstrates commitment to the purchase. Putting down a higher payment will lower your monthly payments and show your lender that you are able to come up with money to pay the home off. The general rule of thumb; the higher the down payment, the better. The larger your down payment, the less you have to borrow and the lower your monthly payments will be, more lenders will be willing to take you on and you have more mortgage options to choose from. Finding a down payment is hard work and the sooner you get started, the faster you'll have it.