How to plan your down payment in 2018
As we mentioned last week in our blog about millennials in the real estate market, many young people are feeling the crunch of bloated student loans and increasing real estate prices. Saving for a down payment remains one of the biggest causes of anxiety for those looking to buy a house.
There are a number of reasons for this. With house prices on the rise, even those who have been socking money away for years feel their targets drifting further out of reach. 20 percent has been the standard down payment in the past, but if house prices rise, 20 percent becomes an increasingly bigger financial target to hit.
So what do you do?
Here are some suggestions for planning your down payment in 2018.
Consider a low down payment program
There has been a surge in the popularity of low down payment lending options, which is a huge turnaround from the recession. Many lenders offer loans with as little as 5 percent down, and sometimes even less. While you will have to pay mortgage insurance that will increase your monthly bill, it can give you some financial wiggle room as you navigate the early years of your mortgage. The last thing you want is to buy a home and have nothing left in the bank if something happens to go wrong.
Consider nearby neighborhoods
They say prime location is everything in real estate, but prime location is also expensive. If you have a neighbourhood in mind, consider looking nearby in adjacent neighborhoods that might be more moderately priced with similar local amenities. You could save anywhere from 3 to 10 percent on the cost of your home, which would counter the increasing cost of your down payment.
Make some lifestyle adjustments
If your target number increases, perhaps you can make some adjustments to your lifestyle to give yourself some increased saving options. It doesn’t have to be all doom and gloom – and there can be incredible benefits to making adjustments that save you money and expose you to new experiences. Rather than eating out all the time, get into the habit of home-cooked meals – which can save you money and help broaden your culinary horizons. Consider running outdoors instead of at the gym, or maybe opt for a local vacation instead of an international one.
Don’t worry – there are all sorts of options! If you want more information, don’t hesitate to get in touch with one of our experts!