Want to buy a house but short on cash to get the deal done? It's a common problem that is keeping countless potential buyers on the sidelines. "Money issues often stand in the way of homeownership," said Bankrate. "A survey by rental service Apartment List found that 80 percent of millennial renters want to buy a home, but most say they can't afford to."
A recent story in Apartment Therapy titled "How I Saved $40K in 5 Years for a Down Payment" piqued our interest. Their tip: Get a side hustle and sock all that money away. Those are some Impressive saving skills, but if you're saying to yourself, "I don't even want to wait five months, let alone five years", we have some tips that can help. None of them are quite as hardcore as working a second job late into the night (but if you're just that committed, more power to ya!). Instead, we're focusing on ways to get free money or make easy money.
Get down payment assistance
Many people don't think about looking for down payment help (beyond asking their parents, anyway). And many of those who do think about it don't realize they might be eligible. Yes, many grants and other programs are specifically for low income borrowers, but others have surprising income caps that could spell the difference between buying now and having to wait a while.
"Grants and loans help you cover the upfront costs of purchasing a home," said NerdWallet. In Nevada, for example, prospective homeowners can qualify for a grant of up to 5% of their mortgage to put toward a down payment and closing costs. District of Columbia residents can qualify for a down payment assistance loan of up to 3.5% of their mortgage. The loan needs to be repaid only if you sell, refinance or vacate the property within the first five years. Help isn't reserved for low-income borrowers. Nevada's grant program is available to those with an annual income below $98,500. The D.C. program caps income eligibility at just over $132,000."
Move your money around
You may be aware of intro offers on credit cards that allow you to do a balance transfer to a lower (or zero) interest rate. While these are great options to take advantage of if you are trying to pay off an existing balance at a higher interest rate, be sure to check with a lender before you take on any new credit; if you're looking to buy a house soon, this could ding your credit and make it harder to get a loan.
Credit cards aren't the only place you can take advantage of great offers to save - or make - some money. Open a Chase Total Checking account and you could get a $200 bonus; a new savings account with them could add another $150 if you meet the requirements for both. Discover has a similar offer.
Sell your stuff
You might be shocked to learn how much you can make just by selling the stuff you already own - and probably don't want to take with you to your new place anyway. Garage sales can yield a couple hundred dollars, depending on the crowd and the goods. Craig's List is a great place to list items you don't want to let go of for a couple bucks at the crack of dawn on a Saturday. Everything from gold and other jewelry to silverware and old phones can be listed online. Furniture, art, and designer clothing can fetch more money at a consignment shop.
Switch providers
Seeing great deals out there for cable/satellite and Internet that are far better than what you're getting? Packages that offer super low prices to everyone but existing customers are frustrating. Don't be afraid to look around, even if you're planning a move in the next few months. Providers typically have a moving package that will allow you to transfer your service to your new address for free.
If you called your existing provider and you're getting stonewalled, call again and ask for the loyalty department. Our recent call to DISH resulted in a $70 monthly savings and upgraded equipment at no cost. This was a far better deal ($65 a month better, and no $100 new equipment fee) than we were offered by customer service.
Ask your boss for a flexible schedule
Working from home one day a week can save on gas, tolls, and even daycare if you're in a situation where your young child could behave while you're working alongside her and your daycare will work with you on price for using them four days per week instead of five. Some employers will also allow you to work more flexible hours on a daily basis so you could leave in time to pick your child up from school and forgo after-school care. Letting them know you're saving for a house may help elicit the cooperation you need.
Collect plastic bottles
If you drink bottled water and are accustomed to putting all the bottles in your recycling bin, collect them and sell them back to make a little extra cash. Will it be life-changing money? No. But it may be enough to enjoy a meal out here and there during your super-saving mode, or pay for a few knickknacks after you move. "The number of bottles that recycling centers will pay per bottle depends on the type of plastic, as well as how many you have," said Small Business. "Michigan pays 10 cents a bottle whereas most other states pay anywhere from a few pennies to 5 cents for each bottle. Check with the recycling center that you intend to use for its rules. Some prefer that you keep caps on the bottles or if they don't accept them at all."
Negotiate your closing costs into the deal
This isn't exactly free money because you end up paying for the closing costs anyway (albeit over 30 years), but if you're a little short on cash getting in, adding the closing costs into the mortgage could get you where you want to go faster. Even better: If the seller will pay the closing costs! This could save you thousands of dollars upfront.
Research alternative mortgages
It could be that a different kind of loan than the traditional 30-year mortgage or FHA loan could greatly cut down on your down payment and also save you money monthly. USDA loans for homes located in certain rural areas may require no down payment. VA loans offered through the U.S. Department of Veterans Affairs "help active-duty military members, veterans and surviving spouses buy homes" with zero down payment, said Bankrate. HUD's Neighbor Next Door program "is designed to encourage renewal of revitalization areas by providing an opportunity for law enforcement officers, firefighters, emergency medical technicians and teachers to purchase homes in these communities," according to the HUD site. "HUD provides a substantial incentive in the form of a 50% discount off the list price of eligible properties."
Written by Jaymi Naciri
Nancy M. Alexander - Stone Harbor and Avalon NJ Real Estate NancyAlexander.com
