You probably have certain goals in mind for the new year, and buying a home may be one of them. But to do so, you’ll need to bring money to the table for a down payment.
Most mortgage lenders require at least some amount of money at closing (though there are certain loan programs that don’t require money down, like VA loans). And if you don’t make a 20% down payment on a conventional loan, you’ll get stuck paying private mortgage insurance (PMI). With that in mind, here are three tips for coming up with your down payment in the course of 2022.
1. Figure out what down payment you need
Your goal may be to put down 20% on a home you buy to avoid PMI. But one thing you should know is that home values are inflated right now, and prices will likely remain high in 2022. Coming up with that 20% could mean having to push yourself on the savings front even more.
To help yourself stay focused, do some research into different neighborhoods you want to live in and see what homes are actually selling for. That way, you’ll have a more specific idea of how much money you’ll need for a down payment.
If saving for a home is a priority for you in 2022, then you may need to make some changes to your budget to facilitate that. Take a look at your different spending categories and see which ones can possibly be cut. If you normally spend $500 a month on entertainment and restaurants, cutting that number in half will leave you with $3,000 extra dollars by the time 2022 wraps up.
3. Boost your income with a side job
Cutting expenses in your budget may only go so far in helping you accumulate a down payment for a home, especially given today’s prices. That’s why it pays to consider getting a side hustle on top of your main job. Since the money you earn from a side gig won’t be earmarked for existing expenses, you should be able to save all of it for home-buying purposes (minus what you owe the IRS in taxes on that income).
If you’re not sure what side hustle to get, think about your schedule as well as your income goals. If you don’t have many hours to dedicate to a side gig, you’ll probably need to go with a job that’s flexible, like doing data entry from home at your own pace. But if you have aggressive savings goals, you may need to …….