Duane Duggan's Real Estate Blog

How to Secure a Sizable Down Payment

While today's real estate market presents challenges for many, it still remains an optimal market for first-time home buyers. Reasonable home prices, a healthy inventory and still-low interest rates create a winning combination for those looking to make the leap from renter to owner. In my years of experience as a real estate professional and a member of the Top 5 in Real Estate® Network, I have never seen such a perfect opportunity to purchase your first home.

As a result of tightened lending standards, however, securing a healthy down payment is even more important than ever. The days of zero-down loan programs are a thing of the past and more money on the table upfront can mean a faster approval for your loan and, perhaps, a better rate.

While you should be sure to leave some cash reserves in place to handle unexpected costs associated with your new home, there are several steps you can take to start building a sizeable down payment. Here are some worthwhile suggestions:

1. Set up an automatic savings plan. Every financial advisor will tell you that when money comes directly out of your paycheck and into a savings account before you even receive it, you will hardly notice the difference. For most, this was money spent on mindless discretionary purchases, anyway, from a daily latte to random online shopping -- chances are, you won't miss it at all.
2. Sell something. You might have a high-ticket item in your possession that you really don't use or need -- perhaps a boat, motorcycle or even an extra big-screen T.V. Cashing in any collectibles or assets can free up funds to go directly into your down payment savings.
3. Liquidate investments. Liquidating stocks, mutual funds, savings bonds or other investments can also help. Cashing in any extra assets will only add to your growing down payment sum.
4. Look into government programs. Talk to your real estate professional to see if you may qualify for a special home buyers program. For example, HUD's Good Neighbor Next Door program offers teachers, police officers, firefighters or other public servants extreme discounts on homes in certain neighborhoods.
5. Don't be afraid to ask. If there is an event coming up in your life that friends and family will most likely get you a gift for, don't be shy -- let people know you are saving to buy a home and would appreciate a check. Loved ones will be more than happy to contribute to this cause. If you're fortunate enough to receive a very sizeable gift, however, let your real estate agent know; lenders may want to know how your down payment was funded in order to make sure you can handle monthly mortgage payments on your own.

These suggestions are just the tip of the iceberg. Please e-mail me for more detailed information about securing a down payment, and be sure to share these ideas with others you know who may soon be making the move to homeownership!