For First Time Home Buyers, Saving Down Payment is Often a Challenge
For individuals and couples currently renting, buying a home is likely a major goal. Your first home purchase represents a major accomplishment and involves significant amounts of time, money, and effort. Unfortunately, with current housing rates higher than the average wages, saving the money you need for a downpayment could prove challenging. As experienced Bronx & Westchester real estate attorneys, we have collected the following tips to help with saving along with other information you will need to be aware of.
Saving for a Down Payment on Your First Home
According to a recent report by the New York Times, higher housing prices are not deterring first time home buyers. However, increased costs are putting a pinch on them when it comes to saving a downpayment. Some people are opting to cash in part of their retirement savings in order to raise the tens or even hundreds of thousands of dollars required to purchase a home in New York City. Others opt for crowdfunding, accepting contributions from family and friends.
While many first time buyers in our area earn decent amounts in terms of income, even they have found themselves forced to scrimp and save. Raising the funds needed often requires foregoing vacations for a couple of years, cutting back on date nights and entertainment dollars, and driving older, pre-owned vehicles.
While you are only required to put down five percent of your future home as a down payment, you will then need to purchase additional mortgage insurance until the amount you owe is less than 80 percent of the total cost. A better option is to be able to put down 20 percent, which also provides some equity in your home immediately. Having trouble saving this amount? Follow these tips:
- Consider an alternate source of income or ‘side hustle’, that provides an income stream without a major investment of your time.
- If you are married, consider putting all or a portion of your spouse’s income towards your home savings fund.
- Look into money market and high yield savings account, which can help you earn more on the money you have already saved.
- Set up an account specifically for your downpayment and anytime you receive a bonus or extra cash, deposit it immediately.
- Consider whether you qualify for a first time buyers program, which can help offset a certain amount of your costs.
In addition to the money you will need for your down payment, do not forget to budget in additional costs, such as home inspections and real estate agent fees.
Contact Us Today for Help
At Cavallo & Cavallo, we know how important it is to many people to buy their first home and how long you have likely waited to take this major step. We work with you to help make your dream a reality. For trusted guidance you can count on, contact our New York real estate attorneys and request a consultation in our Bronx or Westchester office today.