Strategies to Save for a Larger Down Payment

This past June, the Federal Reserve Bank raised interest rates by 0.75% in an attempt to quell the sky-high inflation plaguing our nation. This is the largest single rate increase in 28 years and will have a ripple effect on potential homebuyers seeking mortgages. This change can add tens of thousands of dollars in additional interest costs over the life of a mortgage. If you are starting the mortgage application process, you may be wondering if there is anything you can do to avoid paying this extra interest. While you can’t bring interest rates back down to last year’s levels, something you can do is purchase your home with a larger down payment.

The larger your down payment, the lower your mortgage will need to be, and the lower your interest payments will be. Additionally, a larger down payment increases the likelihood of your mortgage lender giving you a preferred interest rate since larger down payments are associated with less risk for the lender. The ideal situation is to have at least a 20% down payment. Even if 20% down is unattainable for you, the closer you can come to it, the better.

Savings Strategies

• Figure out how much money you want to save and how much time you have to save it. Then set up a dedicated savings account to keep these funds separate from your other money. Since the stock market is currently so volatile, keep the funds in a savings account rather than invested in the market.

• Work a second job. Do you have any free time in the evenings or weekends to take on a gig working at a store, driving for a rideshare service, babysitting, tutoring, etc.? This additional income can help you quickly amass a larger down payment.

• Reduce non-essential expenditures. Instead of going on vacation this year, stash the money you would have spent in your savings account. Other savings opportunities are eating out less and eating out at less expensive restaurants, as well as minimizing new clothing purchases and trips to the nail salon or spa. Are you actually using your gym membership and all the streaming services that you subscribe to? If you are paying a monthly membership fee but using them rarely or never, it may make sense to say good-bye to them.

• When you find a new home and are ready to move in, chances are that you will cull through and donate or sell many of your current possessions as you are packing. How about doing that now instead? Go through your belongings and sell items that are still in good condition that you no longer use. You can either sell them at a tag sale or online on sites like eBay or Craig’s List.

Your Choice Mortgage Group loan originator can advise you on all your options for minimizing the amount of interest that you owe on your mortgage. Contact us today at (561) 395-6900 to learn more.

Since 1995, Choice Mortgage Group has been providing homeowners with the best real estate financing programs available. As a licensed lender, we offer a wide variety of services and programs that satisfy the unique needs of each of our clients.

Specializing in residential mortgage lending for over 25 years, our programs include conventional and government lending, purchases, and refinances. We also offer portfolio lending for self-employed borrowers and borrowers with complicated tax situations. South Florida is where Choice Mortgage Group started, and we like to call it home. We are devoted Florida Atlantic University Owls fans and are proud to be the official mortgage lender of FAU Athletics. We also support numerous other local organizations. For more information about Choice Mortgage Group, visit www.choicemortgage.com.

Choice Mortgage Group

2424 N Federal Hwy, Suite 100

Boca Raton, FL 33431

(561) 395-6900

info@choicemortgage.com