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8 Comments

1

Is there any method to beginning to save for a down payment? What ideas do you suggest for someone who wants to save for a down payment on a home?

2

The oldest advice is still the best. Pay yourself first by arranging automatic transfers from your checking to your savings account. Time them to happen right after you get paid. Throw in any windfalls such as tax refunds and rebates. Scour your spending for anything you can trim (drop a phone line, cancel cable and watch Hulu.com, pack your lunch) and add the amount you save to your automatic transfers. Make the money sacred–don’t dip into it to cover other expenses. Good luck!

3

Thanks for this! How much do you suggest go into the account?

4

Start with $500 and work up from there.

5

What is the range of down payment that most homes are requiring now? On one end, I’ve heard that 5% is a good amount to pay, other people have told me now a 20% down payment is being asked for? I know the more you put down is better, but I wasn’t sure if the 20% was a valid fact.

6

The minimum down payment these days is typically 3.5%, which gets you an FHA loan. At 10%, you can start getting better rates and terms, but only at 20% do you aovid private mortgage insurance or PMI. Read “The end of the 0% down payment” at http://tinyurl.com/pj2cqr for more.

7

I have a friend who took a small loan to obtain the last 2k for his down payment on a house he is purchasing. I was told that this was bad. Is this considered bad, if so, why?

8

If the lender knew he was doing this, then no harm, no foul. If he disguised the loan as his own money, though, he was deceiving the lender, which typically wants to know all of a borrower’s credit obligations.