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5 Tips on Saving for a Down Payment on a Home

Home for sale sign

With tighter lending requirements the new standard, most new home purchases now require a 20% down payment. With an average home on Long Island costing $395,000*, a homebuyer would need to come up with a $79,000 down payment to secure a mortgage.

  1. Find small ways to cut your expenses: Look for ways to cut your monthly expenditures and save the difference. Start clipping coupons for your food or lower your cell phone minutes if you don’t use them. Turn off all the lights when you aren’t using them. Start bringing lunch to work every day instead of eating out. Use coupon codes when shopping online. You’ll find these little things will add up and make a big difference in your savings account.
  2. Find bigger ways to cut your expenses: There are ways to make big changes that will result in big savings. Maybe taking the train instead of driving will save money on gas. Or moving into a smaller apartment, you will save a big chunk of money each month in rent until you have your down payment together.
  3. Get a second job: Sometimes cutting expenses alone just won’t cut it. If you work a 9-5 job, get a second job at night or on the weekends in a retail store or even delivering pizza. You may be giving up some time off from your first job, but you can make some good money working an hourly second job.
  4. Never turn down gifts: If you have a family member who is willing to help you out with the down payment, gladly put the money in your savings account. Make sure that everyone understands the potential tax implications of lending money to family.
  5. Stay focused on your goal: When you are saving for a down payment, you don’t know exactly how much you will need, since the amount can change based on interest rate and loan size, so it is important to have a goal amount. Having a specific dollar amount in mind can help you be more accountable in reaching your goal.

*According to http://www.housingtracker.net as of 11/22/10.

Saving for a home down payment on Long Island may seem impossible at first, but if you take it one day at a time and start small, owning your dream home can be a reality. If you are behind on bills so much that you can’t save, contact me today. Bankruptcy may be a good option for you to get a fresh start. I offer all new clients a free consultation. You have nothing to lose.

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