Saving up for your down payment

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As the new year dawns, you may be considering purchasing your first home or even investing in a second property. If so, the biggest challenge you may face is coming up with the down payment.

There are many different loan programs that offer different down payment options. The most common are the FHA loan program, which offers down payments as low as 3.5 percent, and the conventional program which many times requires 20 percent down.

But don’t be daunted. For some, buying a home will cost less per month than renting, especially with today’s interest rates. And truth be told, your down payment may be hiding in resources you never even considered.

Many times, cutting out a bad habit will help generate thousand of dollars that can be saved for a down payment. These can include quitting smoking and cutting back on excessive drinking and dining out. You would be surprised how much bringing your lunch to work instead of ordering out can save you over the course of time. Switching your cable service or even cellular services ca save you hundreds per month.

Making extra cash is easier said than done, but it is doable. 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 would 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 then turn around and sell that same item online for hundreds of dollars! A garage sale is a quick way to remove clutter and get rid of items, but a little time online can generate thousands of dollars 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 which requires you to live within a certain jurisdiction, many agencies will have programs for first-time home buyers or even low- to moderate-income families. Contact your HR department and ask for what programs if any are offered.

Another way to reach a down payment is to get work at the end of your work day. Maybe you have a special skill or hobby that you enjoy pursuing during your free time. I recently visited a client who made hundreds a month in the evenings and on weekends building custom designed bean bag boxes 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 that friends and loved ones 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 them already have programs to assist buyers with their down payment. Some programs are funded with X amount of dollars and once they are gone, they’re gone. The start of a new year is always a perfect time to begin your research. Good luck!

About Giuseppe Zerillo

Giuseppe Zerillo is the managing broker and owner of Zerillo Realty Inc. He is active on many boards, serving as village trustee of Harwood Heights and corporate secretary for Casa Italia. In 2011, he received the IANU Foundation's 2011 David Award for outstanding promise in the field of real estate, and in 2012 he was honored by the Illinois State Crime Commission for his community outreach. Constantly seeking opportunities to give back, he donates to several charities and raises money for children with disabilities.

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