Mortgage Loans in Denver with Down Payments

Back to the Traditional Down Payment

In today’s mortgage market, it is no longer necessary to
have a 20% down payment in order to qualify to purchase a home.  However, you pay for the privilege of
being able to buy a home with no savings by paying higher monthly payments,
greater interest expense, and sometimes private mortgage insurance (PMI).  But by making a few changes, you may
find saving  for a home isn’t such
an unattainable goal after all.

Commit. 
Once you (and your
spouse or friend) decide that you REALLY want to buy a house, that desire will
help motivate you to save every penny you can.

Review your budget.  If you don’t have one, MAKE ONE.  Determine where you can cut back on
spending and earmark that money for your Down Payment Account (DPA).  Some ideas:  take your lunch to work, clip coupons,
stop smoking, skip the babysitter by setting up a co-op arrangement with friends
and neighbors, cut back on dining out, don’t even open the catalog, and don’t
carry much cash.  Don’t cut out
all of the fun stuff, but do start to be more cautious.

Open a DPA. 
Establish a
special account to hold your savings, such as a high-yielding bank savings
account or CD.  Remember that
although CDs generally earn higher interest rates than savings accounts, they
also have maturity dates, and you will be penalized if you take the money out
before that date.

Tell your family.  If your parents or other relatives send you
presents for your birthday, anniversary or the holidays, they might instead
contribute to your DPA.  Good
manners should keep you from insisting upon this; but it won’t hurt to let them
know about your goal.

Go automatic.  Arrange for a certain dollar amount to be taken
out of each paycheck and deposited directly into your DPA.  If you don’t see it, you won’t spend it.

Reduce credit card debt.  Stop charging more than you can pay off each
month.  Wipe out your existing
credit card debt as quickly as possible; start with the highest-rate cards
first.

Keep on paying.  When you pay off a car or student loan, continue
to write a check for that same amount every month—and put it in your DPA.

Moonlight. 
If taking a second
job for a year or two will make the difference between living hand-to-mouth and
saving for a down payment, take it on. 
Once you’ve covered your down payment, you can probably lose the extra
gig.

Simplify. 
What luxuries can
you live without as you beef up your savings?  Think cable, cell phone, caller id, and
music and books hot off the presses. 
Shop at less expensive stores, compare prices and wait for sales.

Sell, sell, sell.  If you already own property, you can sell it or
borrow against it.  If you own a
boat, motorcycle, camper or car that you can live without, sell it and add the
proceeds to your DPA.  If you own
securities, you can either sell them or establish a loan through your stock
brokerage to borrow against them.

Be realistic.  Know that this is going to be an ongoing process
and it will take you some time to reach your goal.  But even if it takes a year, use that
time to get your debts under control, repair your credit if needed, find the
bliss of discipline, and know that it will all be worth it when you close on
your new home.

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