Hi everyone, sorry I haven’t been blogging. My husband and I took a little trip to Hawaii in August. It was magical. And in September kids were going back to school. It was hectic. But now I’m back.
This is a subject that a lot of people think about. How to save up enough money for a down payment for their first home. In today’s world it’s not easy. The expenses of living and entertainment are highest in the history.
Back when I was younger the homes were a lot cheaper. I could easily afford a small condo in a city with my salary. Now, everything has changed. There is no job stability. Young people are going crazy trying to save up enough money to buy their first real estate investment.
I call it an investment because that’s what it is. If you do it right. In 10-20 years your home will be paid off. You will make (hopefully) huge capitol gains via real estate appreciation and will be laughing straight to the bank. As Albert Einstein said “The compounding interest is the sixth wonder of the world”.
Nowadays you need 10% of a total value as down payment for a property if are going to live there. And 20% down payment of a total value for a property if it is an investment property. If you have more than 4 mortgages that number increases to 25-30%. But these are champagne problems. Let’s start with the first one.
The best thing to do is ask your parents or family to lend you some money for a down payment. Real estate is one of the safest investments. Depending on the kind of relationship you have with your parents they might be very open to the possibility of lending you money for your first home. I know that you could feel a little awkward asking your parents or family for money. But it’s a normal thing. In fact most young people buy their first place with a help from their parents.
Try taking out a line of credit from the bank. If you qualify for a line of credit you should take it. Some banks will allow you to use that money as a down payment on your first condo or a house. It’s a great way to borrow money without large interest rate and without it effecting your credit.
You can also take your time trying to save the entire amount by yourself. I would advice to live below your means. This applies to eating out and entertainment. Set up and automatic monthly or bi-weekly withdraw of money from your bank account into an a savings account. This way you would never notice the missing money and makes saving money much easier. Be patient and disciplined. It’s your future we’re talking about. Here is a website advising you on the amount of the down payment you need: http://investfourmore.com/2013/09/how-much-money-is-required-to-buy-rental-property/
Take buying your first home very seriously. It can be a foundation and path to a secure and a financially stable future.