Almost 1 in 4 home buyers say this is the hardest part of the process for the first time

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Buying a home is a serious financial commitment and an important life decision. But for many homeowners, there is one particular part of the process that can be particularly challenging.

According to National Association of Realtors (NAR), a significant number of potential homeowners – and especially novice buyers – find that building up a down payment is the most difficult aspect of becoming a homeowner.

Keep reading to find out more and how to save on an initial fee Take it easy.

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Keeping a down payment is an ongoing problem

In 2019, a total of 13% of all home buyers indicated that the hardest thing to do when buying a home is to save enough money to invest in a home. In the same year, more than one in four first-time buyers (26% in total) cited accumulating a down payment as the most challenging task.

Traditionally, lenders have required a 20% down payment to qualify for home mortgage… This is no longer the case for many home buyers, as in some cases it is possible to purchase real estate at a discount of 10% or even less. In fact, it may even be possible to buy a house with zero down payment… Some of the mortgages that require little or no down payment include:

However, accumulating even a small down payment can be a financial burden, especially in regions where house prices are very high. If you are trying to buy a home for $ 300,000 and you need even a 10% down payment, that will mean a whopping $ 30,000 in savings. And if you live in a market where the lowest home prices are in excess of $ 600,000 or $ 700,000, then you really need a lot of money.

While current homeowners can often sell their homes for more than they owe on an existing loan to make the down payment, this is not an option. first-time home buyers… This explains why more than a quarter of people who have never owned a home before find it so difficult to accumulate a down payment.

Of course, the down payment requirement has been a problem for millions for a long time. NAR data shows that since 2012, at least 12% to 13% of buyers cited advance payments as the biggest obstacle to home ownership.

How to simplify the accumulation of the advance payment?

Unfortunately, for most people, there is no quick and easy way to save tens of thousands of dollars. But there are a few steps you can take to help you accumulate your down payment faster and with less stress. This could include:

  • Accommodation within a budget that focuses on saving upfront payments. By deciding in advance how much to defer the advance payment each month and budgeting by focusing on it, you can save up the money you need sooner.
  • Process automation. If you’ve planned to save a certain amount for your down payment, set up automatic payday money transfers. And make sure the money is transferred from your checking account to a separate “home” fund held in high yield savings account so you will know that money is being saved.
  • Contribution of windfall income to your down payment. If you receive a tax refund, any cash gifts, incentive check, or other unexpected income, put it directly into your down payment fund.
  • Considering a side concert. If you can do a little overtime or a few extra hours of work per week or month, you can add that money to your down payment so you can buy a home sooner rather than later.

You can also see if you are eligible for any prepayment assistance programs. Whatever you decide, make sure you know how much house can you afford and fully aware of how much of a down payment makes sense in your situation.

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