It’s actually a lot easier to save for your ‘Dream Home’ nowadays with prices at an all-time low. In my daily pursuit of property steals and deals, I come across some of the most marvelous homes, at a much more affordable rate than even just a year ago.  That’s definitely one benefit of this recession! However, some are still finding it hard to save for their dream home purchase.  When old school ‘budgeting’ just won’t work, here are 3 great ways to help you save for your new home.

Matching Programs.

Another great way to save for your home is with the help of a down payment matching program.  These programs help you to accumulate funds for down payment and closing costs.  For example, some banks give $3 for every $1 dollar you save, up to a maximum of $5,000. Most programs can only be used toward the purchase of your first home, homebuyer education classes or programs are required, and income standards are restricted to 60%-80% or below of the area median income. You can find these programs at your local bank.

Find an Affordable Loan Program.

Don’t forget about FHA loans. These government-backed loans require a mere 3% down and are not heavily credit based.  As of Jan 4th, the minimum score was at 585. FHA loans truly give the first-time or former (must have three years in between) homeowner a realistic chance for homeownership.

On a $150,000 home, an average home price for the Tri-State including New York, New Jersey and Connecticut, you are responsible for a $4,500 down payment and about $6,000 in closing costs. Beyond, a general sense of accomplishment, building wealth for your family or the other positive attributes of owning a home is a mortgage payment of $1,113.65*, which I am sure will be a considerable savings or at least allow you to break even monthly, when compared to your current rental payment.

Another perk of FHA: Seller’s Concessions.  FHA allows you to add up to 6% of your closing costs onto your loan.  In our $150,000 purchase example, your complete closing costs would be covered. 6% of $150,000 is $9,000, and with our closing costs being only $6,000, they can easily be added to the loan amount. Your loan amount would then be $151,500 or  $150,000 purchase price – $4,500 down payment + $6,000 closing costs. With seller’s concessions your mortgage payment will only go up $6/ month. Can’t beat that with a stick!

Eliminate Unnecessary Monthly Debt.

Make an effort to reduce large monthly bills like credit cards.  Cut back on using the credit card altogether, using cash for purchases will keep you more aware of spending. Also check the smaller items – Cable, Electric. Get rid of the channels you don’t watch often, and start turning off those lights! Cutting down on your monthly debt will also allow for a better debt-to-income ratio, a very important factor in getting a good mortgage rate.

~Lindsey C. Holmes

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