7 Ideas to save for your Down Payment of your Mortgage Loan
Written by: Chris Edison
Property investment has always been known to be financially rewarding and many have made their millions through this channel. However, in order to acquire a mortgage loan to finance the purchase of a property, you first need to have sufficient cash to pay for the down payment. Usually a minimum of 10% of the property purchase price is required as a down payment, with some lenders requiring up to 20%, failing which private mortgage insurance must be purchased.
With this, although the dollar value of a down payment is relatively high, obtaining the funds for it is not beyond reach. If you have the will-power, there are many ways in which you can save adequate funds to make that down payment for the property that you desire:
If you are determined enough to get what you want, you will most likely be able to attain it. Therefore, with determination comes motivation for you to save, limited only by the size of your paycheck, in order for you to reach your goals. A great motivation booster would be to spend your free time looking around at ideal properties and then forming a vision of yourself as the owner. As your mind drives your actions, you will be compelled to save and nothing will be able to stop you.
A strong goal is always attained with strong planning in place. If you know the amount you need for your down payment, based on the estimated size of your mortgage loan, you will also be able to plan for it with sound budgeting and planning. This can be done by analyzing your spending patterns and identifying areas in which you can cut back or spend less on. With this, you will then know how much you can afford to save each month. Additionally, you could also open a special bank account specifically dedicated for your down payment savings and allocate a realistic portion of your earnings each month into this account.
3.Make your money work harder
Putting your money into a certificate of deposit at the bank, with a higher interest yield as compared to a normal savings account, would be a conventional way for your money to work harder for you. Also, since your money is tied down and cannot be withdrawn without a penalty, you will be less tempted to take the money out and use it.
4.Tell your family
It would be a good idea to relate your intentions to your family, as some parents may be able to chip in, albeit in small ways to help you save up. For example, instead of buying you gifts for the holidays, they can give you a monetary contribution instead which will go into your down payment savings pool.
One good way to put money aside is to have it automatically transferred to the account allocated for down payment savings. With this, you will be certain that you will not be tempted to spend any of it and at the same time will not miss out on any of your monthly allocations.
6.Pay off credit card debt
Credit card debt has one of the highest interest rates imposed and therefore should be paid off as much and as quickly as possible. This is as interest payments are an unnecessary expense to you and clearing your debt will release more available cash for savings.
7.Continue paying yourself
If you have been paying monthly installments for your car loan, credit card debt or your education loan, and have already paid off these loans, continue setting aside these payments to yourself. This is as your lifestyle has already been accustomed to not having the need for these funds, and therefore you can now save this money instead of spending it on extra expenses.
About the Author
Chris Edison is a successful author and regular contributor to http://www.mortgage-traps.com a home mortgage loan information site, that reveals mortgage traps for home buyers.
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