Here’s how to scrounge up the extra cash you need for a home.
- It’s a good idea to deposit 20% of the purchase price of your home at closing.
- Since it takes more money to reach that threshold these days, you might want to reconsider your transportation costs and other things you might not need.
House prices have exploded for more than a year. This has been a glaring point of frustration for buyers, especially lately in light of rising mortgage rates.
Generally speaking, it’s a good idea to put 20% down on a home to avoid private mortgage insurance (PMI). PMI is an additional premium that is added to your mortgage when you fail to make a 20% down payment on a conventional home loan.
But given the high house prices these days, getting to 20% is easier said than done. Plus, even if a 20% down payment is out of reach and you’re aiming for a 10% down payment, that’s still a lot of money in light of today’s home prices. If you don’t have the funds to go ahead with buying a home, here are four options to get your hands on some extra cash.
1. Get a scramble
The house hunting process can feel like a full-time job. So the idea of simultaneously working a second job can seem daunting. But if you’re willing and able to put in the time, a side hustle could be your ticket to more down payment funds. After all, the revenue you reap from this side gig won’t be money you rely on to pay your bills. And so you should be able to take all of your bonus income, minus what you owe the IRS in taxes, and use it for a down payment.
2. Stop driving if you can live without a car
Some people live in places where a car is an absolute necessity. But if that’s not the situation you find yourself in, you might be able to get by without a car for a while. And if so, unloading yours and holding onto your savings for several months could get you closer to your down payment goal, especially when you’re accounting for savings on things like car maintenance and insurance.
3. Spend the holidays
You may be looking forward to taking a vacation this year. And to be clear, when you work hard all year, you deserve a getaway. But if you’re trying to find a down payment on a home, this might be the year to skip the holidays and take a vacation instead. This could free up several thousand dollars, and it’s money that could give you more leeway when buying a home.
4. Sell things you no longer need
Selling a few unused kitchen gadgets or a single purse may not help you much to supplement your home’s down payment. But if you’re willing to really take inventory and spend time advertising the items you carry at various outlets (think a combination of social media, garage sales, and consignment stores), you could end up with a few thousand dollars. you didn’t have before.
Many potential buyers are facing challenges due to soaring home prices. If you’re looking to make a solid down payment, use these tips to get some extra cash and get you one step closer to buying your own home.
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