Every Buyer Should Read: trying to save for a down payment?

Saving up for a 20% down payment can become an almost unrealistic undertaking for many home buyers.  Whether you are paying a lot for rent or supporting a family, it seems like a never ending uphill climb.  Though it is the best route in regards to avoiding PMI and receiving the best available mortgage terms, it is not the only valuable option available.

–        The U.S. Veterans Administration backs a loan with zero down payment, it has interest rates that are normally lower than conventional loans, and there is no PMI.

–        FHA requires 3.5% down.  There are no income limitations, good rates, reduced Mortgage Insurance, and the down payment can be a gift.

–        MA Housing offers only 3% down with no PMI, but they do have income restrictions

–        Many states offer assistance programs for potential home buyers.  For example, BVCAP (Blackstone Valley Community Action Program) offers down payment assistance and/or closing cost assistance.  This is available in Lincoln, Cumberland, Woonsocket, Central Falls, and Pawtucket.  All you need to do is sign up for their first time buyer class, and attain the certificate.  The amount they give you depends on the type of property (1-4 units) and the town you are buying in.

–        Selling a taxable investment such as a stock, fund or bond is an acceptable source for a down payment.  Though avoid 401Ks, IRAs, or other accounts that would incur penalties.  Always consult your accountant or financial planner to get their expert insights on these options.

–        If you are renting, consider downsizing to save some money.  Entertain the option of having a roommate for a while.

–        Outline a comprehensive budget of your current expenses and start slashing.  You can save considerable amounts by ridding yourself of unnecessary expenses and saving that extra money.  (Do you really need 300 cable channels?  Go out to eat 7 days a week?  Would life not be the same without adding more suits or shoes to your already overstuffed closet?)

–        Check with your bank to see if they offer a program for shifting residual change from ATM, debts, or credit card transactions to your savings.  You’d be surprised how quickly you can amass additional savings by simply adding a little bit here and there.

Feel free to contact me with any questions.

• Michael Amaro, Mortgage Loan Officer
  Mortgage Master, Inc
  401-651-5633
  mamaro@mortgagemaster.com