Saving Up Money for Your Mortgage

A couple of decades ago, prospective homeowners needed to save up 20 percent of the value of their home in order to get a down payment on their mortgage. That amount went down over the years, until some mortgages were offered with no down payments. Since the housing bubble burst, down payments have become a necessity again, although you won't necessarily have to come up with 20 percent. Mortgages are still being offered when home buyers can come up with as little as three percent. This can seem like a lot of money, but with a little creativity, you can find ways to come up with this money.

Finding Extra Money

There are several ways to come up with extra money. Your job may allow you to work extra hours. Perhaps you might be able to ask for a raise. If the company that you are working for is struggling and is unable to give you extra work, you could get a job delivering pizzas at night. You could offer to mow lawns for your neighbors or paint houses. Try selling some of your possessions on Craig's List, Ebay, or at a garage sale. One added bonus to selling your possessions is that you have less to move after your new home is ready. If you try some of these strategies, you might find out that you have enough money for your down payment before you know it.

Pay off Your Debts

If you are burdened with a lot of credit card or consumer debt, you will probably find that you have less money every month to go towards the other things that you need to pay for, including saving up for a down payment. Try paying off some of your debts. Every time you pay off a credit card or other loan, you will be freeing up more money that you can save for your house. Paying off your debts will also improve your credit score, which will help you get a better interest rate on your mortgage. While it may take a little more time to pay off a few debts before you take on a mortgage, it will put you in a better financial position in the long run.

Talk to Your Lender

If you talk with your lender, you can ask them how much of a down payment they would like. Try to come up with as much as they suggest, or perhaps a little more. Lenders keep on top of the changing world of interest rates and mortgages, and if you can follow their suggestions, you might be able to get a better deal. Keep in mind that if you can come up with the 20 percent down that was common a long time ago, you won't have to pay for private mortgage insurance.