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Saving for a down payment can be a challenge. But its not impossible.

While a 20 percent down payment isnt necessarily the norm anymore, most loans require some money down from buyers.

Coming up with these funds can be a sticking point on the path to homeownership, especially when you consider that a 10 percent down payment on a $230,000 home requires having $23,000 in cash.

If a home purchase is on the horizon, here are a few ways you can begin saving for a down payment before crunch time sets in.

Automatic Savings
While you may already be doing this for your retirement account, a college savings account for your child, or any other savings account for a long-term goal, set up a separate automatic savings account at your bank specifically for a down payment. This will ensure that money is automatically transferred from your checking account on a regular basis.

If youre buying a home with your spouse, be sure to put the new account in both of your names”and require that both of you need to approve any withdrawals. Alternatively, you could set up a brokerage or investment account and buy low-risk investments for a year or so to truly make your money work for you.

Cut Expenses
This may be an obvious move that youre already taking advantage of, but it cant hurt to double check what youve done and see if you can cut anything else out of the picture.

To get started, take a look at your finances and see what you can cut back on”or eliminate entirely. Also, work on paying off high-interest credit cards first.

Borrowing From Relatives, Retirement
If youre still struggling to save, you may want to consider asking relatives for help.

Whether your parents are willing to gift you money so that you have enough to cover the down payment on your dream home, or relatives offer to step in and provide a zero-interest loan that you can pay back over the course of a few years, be sure to understand everything that borrowing from the family entails.

Another option includes borrowing against your retirement plan. Some 401(k) retirement plans have penalty-free withdrawals, while others allow employees to borrow against their savings to purchase a home. Youre basically repaying yourself for the loan, but its critical to pay it back in a timely manner, as waiting too long could hurt the balance of your retirement account.

These options can be tricky, so dont commit to them unless youre 100-percent comfortable with everything that comes along with them.

This article is intended for informational purposes only and should not be construed as professional or legal advice.

Published with permission from RISMedia.

Mortgage rates have been relatively low for years. Seeing them inch up can cause home shoppers to panic and possibly put their home purchase on hold.

The good news is that there are options when mortgage rates are rising.

First, it’s worthwhile knowing that small increases in mortgage interest rates shouldn’t affect buyers too much ” a one-half percent rise in mortgage rates is only about $28 more per month on a $100,000 loan.

A 30-year fixed-rate mortgage is the most common type of home loan. There are other types of home loans and other options that can make buying a home easier, though they often come with the caveat that a low interest rate now may mean a higher one later. Here are some options:

Get an ARM: An adjustable rate mortgage, or ARM, will have a lower interest rate than a fixed loan, but only for a certain number of years before it changes.

The interest rate will be fixed for three, five, seven or 10 years, then may go up if interest rates are rising. The longer the fixed-rate period, the less savings you’ll see in the interest rate.

Pay More Points: Paying discount points can lower your interest rate. Each point costs 1 percent of the loan rate to lower your rate by one-eighth to one-quarter percent. Paying two points, or $2,000 on a $100,000 loan, to lower a 4.25 percent loan to 4 percent equals $15 per month in savings.

You’ll have to calculate how many months it would take to make up that savings. In the above case, it would take 133 months of saving $15 per month to make up the $2,000 paid for the lower interest rate. That’s about 11 years of living in a home.

Make a Bigger Down Payment: Coming up with a bigger down payment is another way to afford higher interest rates on a loan. The more money you put down, the less money you’ll need to borrow”and, sometimes, it can help you get a lower interest rate.

Do the Floatdown Option: Pay a fee of one-quarter to one-half of a point to get a floatdown option to protect you if mortgage rates drop by the time you close on the loan. If rates fall during the typical 45 days it takes to close a home loan, you’ll get the lower rate.

Those are just some of the options borrowers have when interest rates are rising. Ask your mortgage provider for more.

I hope you found this helpful. Contact me for more home and real estate insights and info.

Published with permission from RISMedia.

Financially, theres more to buying a home than the purchase price”sometimes much more.

After the down payment, and once your closing costs and monthly mortgage payments are added up, it can be easy to forget some of the costly and hidden costs of owning a home. Take these added charges into consideration:

Property Taxes
Property taxes are set and collected by the state, county and local agencies. Sometimes multiple agencies collect funds through a property tax for services such as water, sewer, schools and fire and police departments.

The taxes can go up annually in some areas, depending on a citys services, so the following year’s cost may be difficult to predict. You’ll still want to find out what the current property taxes are on a home before buying. A real estate agent should be able to help you calculate estimated taxes for the following year.

Home Insurance
Since home insurance is required by mortgage lenders, this is one cost that youll be reminded of quickly. It can protect your home from natural disasters, accidents and thefts. Extra insurance for natural disasters, such as floods and earthquakes, can cost more but may be worthwhile.

Maintenance and Remodeling
A leaky roof, cracked foundation or other home problem can be found during the inspection or long after youve moved in. Home repairs can be expensive and something you dont want to put off. Experts recommend putting aside 1 percent of your homes value for maintenance each year.

Along with repairs, take into account any remodeling you want to take on. Kitchens, bathrooms and bedrooms are the most common areas for remodeling, which can cost thousands of dollars. Put some money aside each month in a savings account dedicated to maintenance and remodeling to make your life easier.

The same goes for home insurance, property taxes and other costs you may not think of when buying a home. Contribute regularly to a bank account to pay for the costs of owning a home, and youll be ahead of the game when the bills come due.

Published with permission from RISMedia.

Many renters, especially young couples planning to settle down and start a family, debate whether to keep renting an apartment or buy a home. Depending on your financial situation and long-term goals, though, one option may be better than the other. To determine if its the right time for you to start searching for a house, consider the following:

Money
Some renters think theyre throwing away money on rent. Its true that you might be able to find a monthly mortgage payment that is similar to, or even lower than, your current rent; however, be careful not to overlook the additional costs of homeownership.

As a homebuyer, youll need to save up thousands of dollars for a down payment and closing costs. After the purchase, youll also need to budget for the mortgage, insurance, property taxes and maintenance, among other expenses. As a renter, you might need to pay for renters insurance, but all taxes, maintenance and repair costs are on the landlord.

That said, if you can afford the extra costs of homeownership, there are financial benefits to buying a house. Chief among them, of course, is a homes ability to appreciate over time. Homeowners can also take advantage of tax deductions that might help with overall costs.

Time
One major impact on whether it makes sense to rent or buy is how long you plan on staying in the property. Rentals make the most sense for short-term stays. Unless you intend to live in a home you buy for at least a few years, the house likely wouldnt appreciate, and youd be selling it either at a loss or with little return on investment.

Conversely, a long-term stay in a home could allow you to not only cover the initial costs of purchasing, but also build up valuable equity. That profit isnt guaranteed, though. Various factors, including market fluctuations, can affect a homes worth.

Location
Lets say youre in love with a certain town or city, or you want to live close to family. If the homes in that area are too expensive for your budget, renting might be best. If youre still determined to own, consider looking for a house in a nearby area with lower sale prices. A real estate agent can help you weigh your options.

Freedom
Renting and owning both offer their own distinct freedoms.

As mentioned, renting is great for short-term stays, as it allows you to pack up and move almost whenever you want with little to no financial repercussions. (You could be penalized for breaking your lease early.) You also dont have to worry about handling maintenance as a renter, but the landlord controls whats allowed on the property.

As a homeowner, you have much less flexibility to move around, but you can renovate or decorate your house however you like without having to ask a landlord for permission. Unlike with many rentals, you can also have pets. Some buyers find such newfound independence and authority, alone, worth the price of homeownership.

The Answer
When deciding between renting or buying, consider what you can afford and how youd like to live. If renting is the best option, you can stay in your current apartment or start looking for a new one. If homeownership sounds best, it might be time to ready your down payment and scope out the market.

Published with permission from RISMedia.

For generations, most home purchases were made by married couples. With many people postponing marriage to pursue an education and a career, more and more single adults are overcoming challenges to become homeowners.

Meet Income Requirements
If you want to buy a house by yourself, the lender will make its decision based solely on your income. If the earnings from your full-time job aren’t enough to buy the house you want, or if the monthly mortgage payments would be a stretch, consider looking for a part-time job. You could find a retail position, freelance work, odd jobs, or anything that would allow you to earn money by using skills you’ve learned in school, at a previous job, or by pursuing a hobby. A relatively small amount of money, earned on a consistent basis over a period of time, could make a big difference when it comes to qualifying for and paying a mortgage.

Check Your Credit
You should check your credit reports several months before applying for a mortgage. Your reports might contain errors that could derail your chance of qualifying for a loan. If you find any inaccurate information, contact the credit bureau right away to have it corrected.

Your credit report will also show your current credit scores. If they’re lower than lenders requirements, you can raise them by paying down debt and consistently making payments on time. Dont apply for any new credit cards or loans in the months before you apply for a mortgage because that could make you appear like a risky applicant. At the same time, dont cancel any credit cards you dont use, because that could increase the percentage of available credit you’re using and lower your credit score.

Make a Down Payment
For a single homebuyer, coming up with a 20-percent down payment can be difficult”or impossible. If a large down payment isn’t realistic in your case, explore other mortgage options that have lower down payment requirements, such as a loan from the Federal Housing Administration (FHA).

Consider a Co-Signer
If you cant qualify for a mortgage, or you need to act quickly to get the house you want, you might be able to get someone to co-sign the loan. Before you ask a family member or friend, think it over carefully. Doing so could help you get the mortgage, but what if you couldnt afford the monthly payments? The person who co-signed the loan would be financially responsible. Think about whether that person would be able to cover your mortgage in addition to his or her own bills, or whether your co-signers entire family might suffer financially by bailing you out. Consider how that could affect your relationship, and whether it’s worth the risk.

Make Your Dream a Reality
Buying a house by yourself is an achievable goal, as long as you meet the lenders guidelines. Take a realistic look at your current financial picture and do everything you can to make yourself a qualified applicant.

Published with permission from RISMedia.