Find Your Hidden Down Payment

Down Payment

Need some help with down payment? You'll be surprise where your next home down payment may be hiding.

The biggest challenge for most home buyers is coming up with a decent down payment and closing costs.

Whether you’re trying to scrape by with 3.5 percent for an FHA loan or you’re planning to put down a full 20 percent, saving for a down payment might be the largest savings endeavor you ever undertake, after retirement planning.

Don’t let this be the obstacle that stop you from your dream of becoming a home owner. With some looking and creativity, you’ll be surprise that there are money everywhere in front of you waiting for you to grab.

This does involve some work and effort on your side. Hey, nothing’s free in this world. And nothing good is free.

1. Your budget’s biggest line items. Take a look at your top 10 or so monthly expenses, there are almost always at least one or two items that you could do without, that you’ll end up with more cash at the end of each month.

This takes discipline and how passionate you are about becoming a home owner.

I have a friend who moved her whole family back to her husband’s family for 6 months, saving the rent for their down payment for a bigger house. Go from two cars to one car to get rid of one car payment, or down size to a smaller car. Cancel cable services, or switching to a cheaper phone service providers. By the end of the year, you’ll be at least several thousand dollar richer.

2. Your bad habits. Saving for a down payment is a great time to kick your bad habits. If you smoke, that will be the number one habit to kick. First and second hand smoking causing harm to both the one who smokes, and the people around him/her. Not to mention to raising tax on smoking habits. Instead of eating out at restaurants with friends, invite your friends over for dinner. Stopping drinking and buying soda or any sugary beverages and alcohol beverages. These only add to your medical bills in the future. Water is your best friend. But don’t spend money on bottled water either. The plastic bottle contributes to pollution, and erosion of your wallet. Install faucet mount water filter system and refill your own bottle.

Whenever you fill deprive of your old habits, visualize yourself in your dream home. That will help you stay on track on your saving goals.

3. Your stuff sitting around. Do you have extra stuff sitting around that you don’t used? Now is a great time for some spring cleaning to get rid of things you don’t need. You can sell these on eBay, Craigslist, garage sale.

The extra money you make will contribute to your down payment, getting you closer to your dream home.

Think of it this way, when you finally closing on your home, you’ll have to clean anyway, do it now when you have the time and make some money. After all, you don’t want to pay someone to move your junk to your new home, right?

4. Your spare room or extra seats in your car. Millions of home owners worldwide are now renting out rooms or floors of their current homes for short periods of time on sites like Airbnb and VRBO.

Sites like uber and turo allow you to rent out the extra seats in your car - or the whole vehicle, if you’re not too faint of heart!

5. Your skills and time. Got extra time still after selling your stuff? Leverage your earning power during your off-time, evenings and weekends with your professional skills or personal hobbies to bring in some extra cash.

If you love doing crafts, you can sell creative items on Etsy. In Hawaii, many houses have fruits trees in the yards. You can sell the fruits from your tree at local farmer’s market. Do you have a special recipe that everyone enjoys? Sell that at local farmer’s markets.

You can also earn extra money with cooking, house cleaning, babysitting or dog walking. The opportunity is limitless.

You can also list your services on sites like TaskRabbit. You can also sign up for Mechanical Turks at Amazon, where you can complete tiny miscellaneous task for a fee.

6. Your loved ones. Many people are aware of the benefit of owning a home, so most family member are willing to help. If your parent, sibling or auntie has mentioned their interest in helping you with home purchasing, show your gratitude and let them know of your plan. You’ll need to discuss the details, such as their financial contribution, tax or estate planning.

Alternatively, if your home buying plans are timed alongside your wedding plans, graduation plans or new baby due date, consider opening a down payment registry, so well-wishers can funnel their gift funds right into your real estate savings.

In either of these case, you may need to discuss before hand with your loan officer as there are limitations and documentation regarding down payment fundings.

Related article: Money or Gift Funds for Down Payment

Don’t forget you can also team up with BFFs, siblings, parents or other loved ones to buy a place you can jointly own and/or live in. This arrangement might help you and your loved one accomplish your respective financial and real estate goals.

7. Your employer. Some employers actually offer down payment and other forms of mortgage assistance to employee, especially universities and government agencies that requires you to live locally for their jobs (e.g., police, fire and other emergency personnel) often have housing assistance programs that can include down payment funds or access to mortgage programs with lower down payment requirements.

Even if you don’t work for one of these sorts of agencies, touch base with your human resource department to see if there are any relocation benefits that can help you with your down payment you need to make your move.

8. Your city, county or state. Down payment assistance program are available at both state and county levels. Shop around different banks and mortgage company for down payment assistance program because not all banks will do that, and each may have their own areas of specialty.

These assistance programs are usually available to first-time home buyers (person who has not own a home in the area in the last 3 years), low- or moderate-income households, and purchasing home in certain areas, such as the USDA loans for rural home buyers.

A good place to start is the Hawaii Home Ownership Center, which is dedicated to educating and helping first time home buyer. The down payment assistance program usually has limited funding so start your home buying process early.

Check out The DPAL Program

Finally, don’t forget to set up a separate account to stash your savings away and keep it away from your spending money.

There’ll be sacrifices involved. But ultimately it is what’s important to you.

Recently I asked my 15-year-old daughter, “Do you rather have a nice car or a nice home?” She answered, “a nice home”.

So proud of her shrewdness.

Related article: Home Buying Tips

Author: Anna

We help families in Hawaii achieve financial freedom and the lifestyle they've always dreamt of by empowering them with financial education and money strategies to make more money, save more money, so their money can work for them.

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