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The higher a down payment is on a house, the cheaper the mortgage will be. Its simple math.

The traditional down payment of 20 percent for a house is just that ” traditional. There are all types of loans that can range from zero down to 3, 5 or 10 percent of a homes purchase price required upfront as a down payment.

Saving big ” such as 20 percent ” is a smart way to prepare to buy a house because the more money thats put down, the more favorable the loan terms can be. Whatever amount you want to come up with for a down payment, there are different ways to save for it. Here are a few:

Divide it into increments
Lets say youre planning to save for five years before you buy a house. If you want to save $50,000 for a down payment, youll need to save $10,000 per year. Divide that by 12 and your monthly savings goal is $833.

However you accomplish it, thats your monthly goal ” saving $833 per month. Its a big number, but its a lot smaller than seeing the ultimate goal of $50,000, and is easier to comprehend than an annual $10,000 goal. With that goal in mind, your next step is to figure out how to get there each month.

Save money everywhere you can
Any expenses you can save can add up to monthly savings ” as long as you put that savings aside in a savings account for your down payment fund.

Look at cutting cable TV, cell phone service, gardening and housecleaning bills, and any other expenses that can either be cut back or eliminated. Put the difference in your savings account.

Work extra and sell your extra stuff
Two people can save for a house by working an extra two hours per day. There are all kinds of jobs in the gig economy, from dog walking to house sitting, driving Uber, tutoring and selling a service or product online.

If you have extra stuff that youre not using anymore, sell it online. If your old bike is collecting dust and is in good shape or can be repaired inexpensively, chances are someone will buy it.

Invest
Whatever extra money you make, invest it and let it work for you for the next five years. Compound interest from a mutual fund that you contribute to monthly can grow a lot faster than a savings account can.

Before investing, know that you can lose some or possibly all of your investment. So only invest as much money as youre willing to risk losing. The longer you invest, the more likely you are to ride out market volatility and meet your financial goals.

Published with permission from RISMedia.

House prices come with a lot of digits, but that shouldn’t scare you away from buying a home. A mortgage”as opposed to rent”allows you to slowly purchase your home over time. So, instead of paying rent and helping somebody else pay their mortgage, why not invest in your own property?

According to the InCharge Institute of America, there are many benefits to homeownership. Here are some reasons why paying a mortgage and owning your own home is better than paying rent for a temporary living space:

• The property you purchase now will most likely be worth more in the future.
• With fixed-rate mortgages, you can rely on the predictability of monthly costs.
• You have greater privacy and freedom to make your home your own, since there is no landlord overseeing the property.

Of course, owning a home and taking on a mortgage is a big responsibility. The InCharge Institute advises that you take the following into consideration before embarking on homeownership:

• You will bear the responsibility for maintenance of your home, including repairs that can range from inexpensive to complex and costly.
• Owning a home is a long-term financial commitment.
• Take other costs into consideration, such as the down payment, closing costs and moving expenses.
• Your mortgage payment may be higher than what you currently pay in rent, so make sure you can afford the increase.

In comparison, renting comes with additional costs, as well, such as security payments and damage fees you may incur.

Whileit is true that purchasing a home can be initially more costly, it can also work to your advantage, functioning as a savings program you can’t quit on. If you will be residing long-term in the same area, then you might as well be turning those monthly payments into property ownership. If this sounds like an investment you’re ready to take on, it might be time to go house hunting.

Published with permission from RISMedia.

Buying a home often requires years of saving for a down payment, which is money that a buyer pays upfront toward the cost of a house. This is the immediate equity that a buyer has when purchasing a home. Unless buying with cash funds, the rest of the money comes from a loan. Different lenders require different amounts of money down based on a variety of factors. Lenders refer to a down payment in terms of a percentage of the purchase price.

Private Loans
Private lenders typically prefer that buyers put down 20 percent. Some will accept lower down payments, but those borrowers are considered a higher risk. Lenders want a guarantee and require borrowers with lower down payments to pay for mortgage insurance. This is a policy that pays the lender if the borrower defaults on the loan and the house winds up in foreclosure.

The cost of mortgage insurance depends on the size of the down payment and loan, as well as the borrowers credit score. Mortgage insurance tends to be expensive, which is why many people decide to put off buying a house until they can save enough money to put down 20 percent. If you put down 20 percent, you will have a better chance of being approved by a private lender, and you will also generally qualify for a lower interest rate, fees and monthly payments.

Government Programs
The Federal Housing Administration (FHA) allows borrowers to obtain mortgages with as little as 3.5 percent down. FHA guarantees a portion of the amount borrowed and offers loans at lower rates than private lenders. FHA charges less for down payments of 5 percent or more and does not base its fees on the borrowers credit score.

Fannie Mae and Freddie Mac are government-sponsored companies that make money available for lenders to provide to borrowers. The programs are designed for people with low- and moderate-incomes. These mortgages require as little as 3 percent down. The Department of Veterans Affairs (VA) offers loans with zero percent down for active-duty military members and veterans. The Department of Agriculture also offers loans with no down payment to encourage home purchases in specific rural areas. Borrowers that obtain loans from private lenders guaranteed by the government are required to pay for guarantee fees, but not mortgage insurance.

Finding the Down Payment That is Right for You
The amount you should put down on a house depends on your specific financial situation, including your income, savings and credit score. It also depends on the price of the house you want and whether you want to buy immediately or can afford to wait. Putting down more can significantly lower your monthly payments. You need to make sure you do not use up all of your savings because you will still need to buy furniture and have money set aside for any necessary repairs. You should also consider the fees and closing costs. Compare lenders and weigh your options carefully to make the right choice.

Published with permission from RISMedia.

If you’re shopping for a home loan, you’re likely focusing on interest rates. Below are a handful of questions you may have about the art of the interest rate.

How are interest rates determined?
Interest rates are influenced by shifting economic indicators in your financial market. This type of fluidity means they can change daily, or even hourly. This is why it’s important to shop around.

What does it mean to “lock in” a rate?
Since interest rates are so fluid, many buyers choose to combat this by locking in a rate when they find a good one. A locked rate is a contractual agreement between the lender and buyer that offers the buyer protection from financial market fluctuations that could affect the range of the interest rate. There are four major components to a rate lock: loan program; interest rate; points; and the length of the lock. If your interest rate range is locked and there are no subsequent changes to your loan, the interest rate range on your application generally remains the same; however, if changes are made to your loan, your final interest rate at closing may be different.

What does it mean if your rate is “floating?”
If your interest rate is floating, it means it’s not locked. Instead, it’s fluctuating with the up-and-down movements of the market. The benefit of this is if interest rates decrease, you will have the option of locking in at a lower rate, but if the rates rise, you will lose access to the lower rates.

Published with permission from RISMedia.

A home is the biggest single purchase most people will make. Matt Blashaw, a licensed contractor and host of the DIY network show, Money Hunters, offers six tips for planning and performing routine maintenance that can save dollars as well as future headaches:

• Save on tools ” Unless its a tool you will use often, check local yard sales for good used tools at good prices. If its a tool you may use only once for a specific project, consider renting it.
• Save leftovers ” With most home-improvement projects, there are leftover screws, bolts, and other pieces of hardware left over. Storing them in plastic organizers (as opposed to dumping them in a drawer) can save you from having to buy a bag of a certain size screw when you need only one or two.
• Save on paint ” If you are flexible with color, you can save big dollars by buying oops paint colors from the home store. That is, colors that werent what the customer wanted and therefore refused to accept. Also, consider that one gallon of more expensive paint may be cheaper than buying two gallons of a cheaper brand that will likely require two coats.
• Check toilets regularly – Water leaking from your toilet tank will raise your utility bills and cause premature wear of the toilets internal workings. One a year, add some red food coloring to the water in the tank. Come back in about an hour and see if the water in the bowl is pink. If it is, you have a leak.
• Protect plumbing ” Accumulated fats, oils and hair are the most common causes of clogged pipes. Buy a hair strainer for the shower drain. Do not dispose of fats down the kitchen sink ” and if a pipe is plugged, skip the Drano, which can damage the pipes. Try using a drain snake yourself before you call a plumber.
• Change air filters – Change the air filter in your central heat and air unit often, especially during peak usage months. Thirty days is the absolute longest you should leave an air filter in place.

Published with permission from RISMedia.