Are you starting to get serious about purchasing a home? Here are five expert tips to help you along the way. Photo: Getty Images

Economy expert Tommy Sibiga shared with Latin Times five helpful tips on how to save money for your down payment without headaches. According to Sibiga, a great target is to get to 20% down but there are loan options all the way down to $0 down.

If you have started to make some strides on your savings plan, there may still be some
room for improvement. The first thing to do is to create a budget, open a savings account, and then start to utilize both.

Here’s five more tips to help you along the way:

  1. A great tool is to set up recurring deposits into your savings account. It can be as simple as a recurring monthly transfer or nowadays there are several new apps that help make savings automatic- such as Acorns. These apps can automatically take small amounts of money every time you make a purchase and place it in a designated account. The linked account could just be your savings account, or you can also direct towards certain investment opportunities. Some apps offer more control than others. The nice thing with all these options is that it’s automatic. If you so choose, you could set it and forget it.
  2. Another great piece of advice is to deposit your entire tax return into your savings account. If you’re like most, the extra influx of cash during tax season gets quickly spent. Rather than going on a spending splurge, that money can be put aside towards your down payment. Even if it’s a small amount- it all goes towards helping accomplish your goals.
  3. An alternative route to saving your tax return is to keep more of your own money in your own pocket before the taxman gets it. If you customarily get a large tax return each year, that means you’re allowing the IRS to hang on to too much of your paycheck each cycle. You can increase your paycheck and put the extra aside in savings by simply adjusting your w-4 form. You’d adjust the form to allow for more allowances and thus have less withheld each paycheck. Not sure how to adjust? The IRS provides employers (and employees) a web-based calculator that can help evaluate the correct amount to be withheld.

Here’s two more tips that may be more frowned upon by others but yet very effective.

  1. The first is that you could pack your bags and move back home with your parents. Sure, they may not be the hippest roommates you’ve had in a while but you may be able to live there rent free. If you’re not paying rent on a monthly basis then you should surely be able to make routine contributions into your savings. Your down payment should grow exponentially in a short period of time with your living expense being so minimized. It may be wise to set forth a timeline so that you don’t overstay your welcome and so that you are motivated to stay on task.
  2. Lastly, you can simply ask for a gift from relatives. Most all loan types allow for some percentage of the down payment funds to be received from a gift. There may be limits to how much is allowed dependent upon your loan type and there are definitely a set of rules/procedures for how to process the gift. Traditionally, you’re going to need to document that the gift was in fact a “gift.” You’ll also need to provide a paper trail of money going out and money coming in. This can mean that the donor of the gift needs to provide to the purchaser’s lender a bank statement showing the funds being processed. It’s important to tell your donor that this may be needed because often times the donor can be apprehensive of providing such documentation although it is a requirement. Before transferring funds be sure to familiarize yourself with everything that’s needed.

Saving up for a down payment is hard work. It’ll likely take time, hard work, and lots of discipline. But, if you do it well, it’ll be extremely beneficial to win bids on your dream house, get the best interest rate possible, and/or secure the best loan option available. The normal saving methods will work but you can also try out new technology, tax strategies, and/or resorting to moving home or asking for gifts.

For other financing advice and discussions be sure to check out Sibiga's other financial articles.

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