Saving toward a down payment

With 2013 here, you may be considering purchasing your first home or investing in a second property. The biggest challenge you may face is coming up with the down payment.

There are a variety of loan programs with different down payment levels. The most common are FHA loans, which offers options as low as 3.5 percent, and conventional program, which often require 20 percent down. Making more money is easier said than done for many, but truth be told, you already may have your down payment hidden in other resources you never even thought of.

Many times, eliminating a bad habit will help generate thousand that can be saved toward a down payment. These can include smoking, excess drinking, and frequent dining out. You would be surprised how much bringing your lunch to work instead of ordering out can save you over the years. Switching your cable service or even cellular services will many times save you hundreds per month.

Take a close look around your home. I know many buyers who have sold items that were useless to them in order to come up with a down payment. This could include motorcycles, second vehicles, tools and even old computers and electronics. Never underestimate the value of these items; you’d be surprised how quickly you can come up with a portion of your down payment this way. A relative of mine will purchase an item at a garage sale for a quarter, only to turn around and sell that same item online for hundreds of dollars! A garage sale is a quick and simple way to remove clutter and get rid of items, but a little research and time online can generate thousands more.

Talk to your employer! Believe it or not many of them offer a mortgage assistance program and some will even assist you with your down payment. If you work for an agency that requires you to live within a certain jurisdiction, many agencies will have programs for first-time home buyers or low-to-moderate-income families. Contact your HR department and ask what programs if any are offered.

Get creative! Maybe you have a special skill or hobby that can be converted into cash. I recently visited a client who made hundreds a month during his down time building custom-designed bean bag boxes in his garage, then selling them on eBay or craigslist. If you are getting married around the same time as you are purchasing a home, consider opening a down payment bank account, which family members and friends can deposit money into as a wedding gift.

It is never too early to contact and speak with a mortgage lender or Realtor. Many of us already have programs to assist buyers with their down payment. Some programs are funded with X amount of dollars and once they’re gone, they’re gone. The beginning of a New Year is a perfect time to start your research. Good luck!

For more, call 847-292-4700, e-mail gz@zerillorealty.com or visit www.zerillorealty.com.