One of the first things lenders ask you before prequalifying you for a Loan is how much of a down Payment you can make. If you’re not selling another piece of property before taking out the new loan, you might not have down payment money.
While aspiring home buyers usually start saving up for a down payment before shopping around for a loan prequalification, people looking for car loans and other types of direct consumer loans may not have as much preparation before that prequal.
Although it’s possible to get a second loan to cover the down payment, doing so might also disqualify you for the loan you wanted to get in the first place.
And while there are down payment grant programs, they’re only for mortgages. And the same is true about low or no down payment loan programs — they’re not available for auto loans and other direct consumer loans.
So here are tips on how to save up the money for a down payment on one’s first loan of any kind.
Budgeting will help you realize where you might cut expenses so that you might reallocate money toward savings. Go through it more than once looking for spending you might reasonably trim — in fact, do this monthly, reviewing how well you stuck to the plan and where you might improve.
To help yourself stick to your plan you might want to begin participating in a savings challenge focused on setting aside money on a regular basis.
Another great way to make your budget stick is to set up a separate savings account for the purpose. Ask your bank to set up an automated deposit of cash from your checking account into your savings account at least once a month, but ideally on every payday.
Speaking of savings accounts, look for one that pays a higher interest rate than what you’re currently earning on your existing accounts. Even if it means going to another financial institution, you’ll still be able to make automatic deposits into the new one.
Consider opening a money market account for this — but before you do, read all the fine print to make sure there aren’t any hidden fees.
If you’ve been at your job for a while, ask for a raise. Although it can seem daunting, don’t let yourself be intimidated out of asking. Instead of going in cold, prepare a statement in advance, starting by writing it out and then rehearsing aloud. Don’t ask until you have spiel perfectly polished and wait for a time when your boss is in a good mood.
To prepare that statement, write out a list of your accomplishments, and research any kind of statistics about the going rate for people with your skills and experience.
You could also throw in data about how hard it might be for your company to have to replace you given current demand for someone with your qualifications (assuming that’s true for your line of work). Then organize what you plan to say so that you make the most compelling points first and make efficient use of time.
If at first you don’t succeed at getting a raise, try asking for the money in the form of a bonus. If you already receive a bonus, try negotiating for a higher one. Then make a point of depositing the entire bonus in your high-interest paying account. Any other time you receive a lump sum — such as back pay or unused vacation — deposit the whole thing as well.
Look for More Work
If all else fails, start looking for a higher paying gig. With the exception of a few sectors, the economy is strong enough that you should be able to find something that pays better.
As long as you’re looking for higher-paying work, you might also want to get a second job, at least for the short term. Look for opportunities that won’t conflict with your full-time job scheduleand that also won’t cut into time you would otherwise spend with loved ones.
Ideally, you want to find a second gig where you can create your own schedule and do something you love doing, so you don’t get burned out or end up losing your first job because of it.
Down Payment Money
If you’re finding it difficult to get the money together for a down payment, perhaps you might want to think twice about whether this is the best time for you to buy. You can always wait until your circumstances change.
Readers, how have you gotten the money together for your first down payment?
The post How To Amass Funds for Your First Down Payment appeared first on Dual Income No Kids.
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