SAVING MONEY TO PAY THE DOWN PAYMENT FOR YOUR HOME LOAN

Due to the recession that has affected the financial world; you will not get a loan for your house without paying a down payment. If you are considering buying a house now, then you have to pay a large down payment to be considered for the home loan.

You should first save enough money for the down payment and then start searching a house. Since good deals are available in plenty these days, you will be tempted to buy your dream house now. The primary question to be asked is: how will you get it?

The standard down payment is about twenty percent of the price. This rate will satisfy the security needs of both the lender and the buyer. At 20%, the buyer will think many times before backing out from the agreement he has signed with the lender.

So now the question is how to get that 20%? Some people are under the myth that the only way to save that much money is by saving a particular percentage of money each day, each week or each month, till the sum of your down payment is reached. For several potential buyers this is a good way though it takes a long time.

Though the method mentioned above is the best way to do it, you should know that there are other options as well.

Given below are some tips which will help you pay your down payment:

1)    Get it from your 401(k)

You can pull out your down payment money from your 401(k) that has to be repaid with interest over a five year period or more.

The greatest advantage of this method is: your loan isn’t considered as a debt by banks when they calculate the debt qualifications for you. Therefore, your loan application is not in jeopardy.

The disadvantage, which is a substantial one is if you decide to quit your present job to apply for another better one, then you have to pay back the entire loan at least ninety days in advance. If you ignore this rule then you will be in a big tax problem. Therefore, take expert advice before you choose this option.

2)    Place your savings in to Investments

If you can wait for some time, then put your savings in time deposits so that it will earn some interest for you. Speak to you financial adviser and invest your savings in a safe place.

3)    Reduce Spending

If you want to save till you reach the amount required then here are a few tips to reduce your expenses.

Make a list of all your purchases including small items like candy bar. Continue this daily for one month and then, calculate where you can save. Search for any expenditure that can be avoided or make divisions for your expenses and allocate a sum to each.

Giving up a small habit like having Starbucks, which costs $4.50, will save about $1620 a year. Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a high risk merchant.