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Wednesday, June 12, 2002 Saving for a down paymentTips to achieve the dream of home ownership easier, fasterSaving for a down payment is a challenging step to becoming a home owner. According to Fannie Mae's 2001 National Housing Survey, 16 percent of Americans are currently saving money in hopes of achieving the American dream. "Many potential home buyers can afford a monthly mortgage payment, but lack funds for a down payment," said Richard Douglas, regional manager over the Fayetteville area for Wells Fargo Home Mortgage. "There are mortgages available now that require little or no money down, and these mortgages are helping many people become home owners. However, there are still home buyers who would prefer to save for a down payment." Douglas said the hardest part about saving for a home is getting started, and offered the following tips to make saving for a down payment easier: Pay off high-interest debt. Consumers do not need to be free of debt to buy a home. However, consumers may save more in the long run by paying off high-interest loans or debts that are accumulating interest. For some consumers, the easiest way to tackle this is to pay off debts with the lowest balances first. This provides a sense of achievement and a feeling of progress as each debt is paid off. Make the saving automatic. Sticking to a budget is difficult because of the temptation to purchase items that provide immediate gratification. It may be easier for you to have a portion of your paycheck automatically deposited into a savings or investment account. Many employers that offer direct deposit also provide the option to allocate funds to more than one account. Maximize the return on your savings. Consider depositing your down payment savings in a short-term investment fund with the potential for a higher rate of return than a savings account, such as stocks, bonds or mutual funds. This may help your down payment fund grow faster. In addition, an investment fund is not as easily accessible as a savings account, which may help prevent impulse spending. Save tax returns and bonuses. It is tempting to go on a shopping spree when you receive a tax return, a large commission or a bonus. However, applying tax returns and bonuses to your down payment fund will give you a significant boost and many help you become a home owner much faster. Visit with a lender or a financial advisor. Many potential home buyers are surprised to learn that saving money is just one way to acquire funds for a down payment. Home buyers may be eligible for other sources of down payment funds, such as local down payment assistance programs. Home buyers may also be able to tap their 401(K) for down payment funds. A home mortgage consultant can help you learn more about these options. "Saving for a home takes discipline, but the reward of home ownership is definitely worth the work," said Douglas. "If you can follow a few of these tips, you'll be off to a good start." For more information on mortgage products and services, visit Wells Fargo Home Mortgage on the Internet at www.wellsfargo.com of call (800) 222-3408 for information on the branch in your area.
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