Saving for a Down Payment
In the wake of the newly announced MassHousing zero down program, it’s important to remember that while a zero down payment may sound great, it may also make your Offer less competitive if/when multiple Offers are submitted.
When you begin to consider purchasing a new home, often times the first step is to start saving for the down payment. A down payment is the amount of money a buyer pays out of their pocket, while the remainder of the purchase price is paid by a mortgage. This amount is typically expressed in a percentage, for example on a $100,000 home purchase, Adam put down 20% or $20,000 and mortgaged the remaining $80,000.
As a Seller, if two offers are of the same purchase price amount, they will refer to other terms of the Offer, including the down payment, to distinguish the strength of the offers. If all other terms are the same, the Offer with the higher down payment would be considered the stronger of the group.
Here are several ways to help save for that down payment:
Build a budget. Taking a look into your spending habits can help you narrow down areas where you could be stricter with your budget and help save.
Pay off high interest debt, like credit cards. Don’t get stuck paying outrageous interest rates while trying to save for a home. Work to pay off credit card debt to help save on the monthly payments.
Go grocery shopping and stick to a list. People who grocery shop aren’t as likely to order out and in turn save money on eating in.