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Creative ways to save for a down payment on a new home

Business
Sunny Jones, Realtor Your CommUNITY Real Estate Partner 3717 S. LaBrea Ave, Ste. 102 www.agentsunnyjones.com

 

By Agent Sunny Jones

It’s no secret that it’s expensive to live in Los Angeles.  We see all of the headlines and clients get discouraged and think they will never be able to buy anything.  Understandably, so.  View Park as an example, has median home sales of just over $1 million.  One of the largest barriers of entry into homeownership is saving up for their down payment.  Let’s look at a few solid solutions for those who seek to become property owners.

Take advantage of down payment assistance programs.  There are programs and agencies that were established with the sole purpose of helping you become a property owner.  For example, CalHFA (California Housing Finance Agency) has several programs, NeighborhoodLift offers $25,000 grants, NACA offers a no down payment program.  Each of these programs have their own guidelines, so work with a professional who can help guide you through the process based on your unique profile.

Be open to various communities. Your first purchase may not be in your dream neighborhood, but can still be a smart investment especially if you consider buying income property as your first property.  A property with 2-4 units qualifies as residential property.  For many programs, 75% of the income from the units you’re not living in can help you qualify for more.

Retirement.  Your 401(k) can be a source to help you get out of the renting cycle. For most programs you can use your 401(k) as a source of down payment.

Employer sponsored programs.  There are employers that will assist you with your down payment.  In an effort to recruit and retain the best talent, some employers offer this option.  Are you being recruited?  Ask about this as part of your incentive.

Increase your income.  Easier said than done but ask for the raise, get a side job or even create your own side job utilizing your skill sets.

Reduce expenses.  Obvious, right?  This may come in the form of downsizing from your current living arrangements.  How many subscriptions do you have?  Do you need cable?  How many times are you eating out every week?  Did you really have to purchase the latest Jordans?  How much did you spend in late fees last month?  Take a good look at your non-essential purchases by actually tracking those spending habits and make a concerted effort to reduce your spending.

Move in with family if you have the option.  Insert gasps here!  I know this may not be ideal, but if it’s possible it’s worth considering as not having to pay $2,000-plus for a 1-bedroom apartment, plus additional housing expenses like utilities and insurance, can greatly expedite your savings process.  If you haven’t moved out yet, stay home and save!  Open a separate account for your savings so you don’t even see the money.  It helps to set a timeframe so that everyone understands the expectations.

Gift funds.  Speaking of family (or a really amazing friend), gift funds are a source of down payments as well.  If you’re getting married, consider saving all of your gift money for your down payment.

It’s important to keep your financial goals in mind when you’re making sacrifices to realize those goals.  Many of those who have achieved homeownership had to make sacrifices at some point.  It’s not easy, but possible.  Be encouraged as there are folks out here making it happen!