Gilbert Down Payment Savings Methods: Debt, Windfalls, Programs

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In part one of this two-part blog series, we looked into some of the simplest ways you might go about saving up for a down payment on a home in the near future. The down payment is often the most significant lump sum paid during this process, and saving for it will often be something you start thinking about several months in advance.

At VIP Mortgage Inc., we’re happy to assist Gilbert clients with a wide range of services in this realm, from quality mortgage rates to help with down payments and much more. What are some other common ways buyers go about saving up for an eventual down payment, and which might be right for you? Here’s a primer.

Kill of High-Interest Debt First

If part of your down payment savings approach involves paying off credit cards or other high-interest debt, you’re not alone. In fact, this is one of the smartest moves you can make, as it will save you money in the long run and free up more money each month to put towards savings.

If you have multiple sources of high-interest debt, it might make sense to focus on paying off the one with the highest interest rate first. Alternatively, you could focus on paying off the debt with the lowest balance first, as this can provide a quick win and some momentum to help keep you motivated.

Utilize Windfalls Smartly

Whenever you get a financial windfall, such as a tax return, a holiday bonus, or a raise at work, it can be tempting to spend it on something frivolous. If you’re trying to save for a down payment, though, it’s important to resist this urge and instead put that money towards your savings goal.

Even small windfalls can make a big difference when saving for a large purchase like a down payment, so don’t overlook them. If you can, try to automatically funnel windfalls into your savings account so you’re less tempted to spend them.

Explore Specialty Loan Programs

In many cases, first-time homebuyers are able to take advantage of special loan programs that can help with the down payment. For example, the U.S. Department of Housing and Urban Development (HUD) offers a program called the Good Neighbor Next Door initiative, which helps teachers, law enforcement officers, firefighters, and other public servants buy homes at a 50% discount.

There are also a number of down payment assistance programs available through state and local governments, as well as some private lenders. If you’re a first-time homebuyer, be sure to explore all of the loan programs for which you might be eligible.

For more on how to go about saving for a down payment, or to learn about any of our mortgage loan services to Gilbert clients, speak to the pros at VIP Mortgage Inc. today.

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