Save Up to Take Advantage of Low Rates

With mortgages rates at record lows, more and more people are getting excited about home ownership. Unfortunately, one of the big obstacles standing in their way is the down payment needed to get financed for a home mortgage loan. There are some ways that you can start saving now for a down payment and come up with a sizable sum before long. Here are a few common sense ways to do that so you can be in a better position to get approved for a loan.

Check with State Programs
This idea isn’t about saving money, but it can help if you are having trouble coming up with money for a down payment. Many state housing finance programs are available across the country to help first-time homebuyers get approved for a mortgage regardless of their down payment. These agencies offer grants, subsidized home loans and other programs for people who are trying to buy a home. Some state agencies will finance more than 100 percent of the home’s purchase price while other agencies have different methods for helping people buy their first home.

Ask Rich Relatives
It may seem cliché or tacky, but it doesn’t hurt to ask a wealthy relative if you can get a cash gift to put towards the down payment on a new home. This is one of the most common ways to get money for a home’s down payment, but be sure you have a written agreement about any repayment options before accepting the money. Remember: Any gift monies equaling more than $26,000 for a couple must be reported to the IRS and it is subject to federal taxes.

Tap Into Your Retirement
If you haven’t owned a home in the last two years, you may be eligible to withdraw $10,000 from your IRA without a penalty. You can use this money for a down payment, to put towards closing cost or financing. However, tapping into your IRA should be a last resort.

Online Savings Accounts
There are many online savings accounts that you can open and deposit money for the sole purpose of saving up for a down payment. Put extra money in that account every time you get a bonus or unexpected money and you will have a decent down payment before you know it.

Evaluate Your Budget
Are you spending more money on something than you really need to? Go through your budget and see if there is anything you can cut out from your monthly expenses. Does your cable bill include movie channels that you never watch? Cut that from your bill and add that money to your savings account. Little things like that really add up so see how much you can save in just a few months.