20 Down Payment Tips for 2020

South San Francisco, Ca   February 20, 2020 Submitted by Bill Wolfe – Big Valley Mortgage NMLS #16095/1850

PREFACE: Do you believe home ownership is beyond your reach?  Here are some tips on how reverse that thinking, and save that $$ to help you reach a new reality, from former South San Francisco resident Bill Wolfe, a top producing Mortgage Loan Planner. 

Buying your first home can seem like an insurmountable goal, especially if your expenses are already high. Pricey rent, not to mention car payments, insurance, utilities, groceries, and all the other realities of life, can make it hard to save.

Many renters assume they’ll never be able to buy a house for this reason. They spend so much money month to month, there is little or nothing to put away. And the idea of coming up with tens of thousands of dollars for a down payment seems impossible.

But here’s the reality: The current national median home price is $257,000, and 3.5% of that—the minimum amount needed for an FHA loan—is just under $9,000. Does that seem more doable?

The truth is that there are probably a bunch of cuts you can make to your current budget to come up with that kind of cash. Here are 20 ideas for 2020.

Set a frugal but realistic budget
Do you know how much you spend every month on bills, necessities, and incidentals? Many people don’t. Having a debit card makes it easy to spend, spend, spend, and, often, a lot of what is being purchased is unnecessary, frivolous, and counterintuitive to your goals if you’re looking to buy a home.

Setting a budget is key. But it has to be a realistic budget so you can stick to it. We love mint.com, a free website from the makers of Quickbooks, that can help you set up a budget and track your spending.

Cut the cord
“The average cable or satellite user spends a little over $100 a month on their TV bill, which means canceling their service could save them over $1200 annually. But many pay TV defectors will likely be looking for an alternative way to watch their favorite programs,” said Mental Floss. “Assuming you’re one of the 83 percent of consumers who pays for both TV and internet, switching to a web-based service shouldn’t be too expensive. An Amazon Prime plan costs $99 a year, a basic Netflix subscription costs $132, and Hulu costs $96. Even if you spring for all three choices, you’ll still only be paying $327 annually, saving you about $875 if you’re a former cable subscriber.”

Work out at home
Go for a run, jump rope, do some planks, or take a fitness class on YouTube. There are tons of options for home-based fitness that will allow you to take a break from the gym, and the payments. That $60 a month translates to $720 a year.

Pause your retirement savings
“If you’re already saving for retirement, this might feel really weird,” said Dave Ramsey. “After all, Dave normally recommends you start investing 15% of your household income for retirement right after getting your emergency fund in place. But if you’re planning on buying a house in the near future, hold off on your retirement savings and redirect those funds toward your down payment. It’s temporary, so don’t worry. Once you’re sipping coffee in your new breakfast nook, you can get right back to that 15% toward your retirement goal. Think of it like this: If you’re currently investing $500 a month into 401(k)s and IRAs, and instead, you put that toward your down payment savings, you could save around $12,000 in two years. That’s a big boost to your savings timeline!”

Make your lattes at home
This has been a hotly contested topic, with many financial experts insisting that millennials are throwing their money away on expensive coffee drinks and millennials countering that they should be able to spend their money any way they want. Shawn M. Carter wrote about this topic for CNBC and admitted that he had spent $2,300 at Starbucks in one year!

Ditch the dry cleaning
Save hundreds of dollars per month with a few dry cleaning tricks. “There is a difference between ‘dry clean’ and ‘dry clean only,” said Capitol Hill Style. “As The Laundress explains, many items labeled ‘dry clean’ can actually be machine washed on gentle or hand-washed. So when looking at clothes, check the tag: Is it dry clean or dry clean only? To lengthen the time between cleanings, you need a steamer. A steamer smooths out wrinkles and refreshes clothes. And since hot steam kills bacteria, it can prevent clothes from smelling. This $20 steamer from Secura is well-reviewed.”

Go generic
Simply switching from name brands to generics at the grocery store can save you $160 per month, per Dave Ramsey.

Cook at home
According to meal planning service Wellio, “You can save around $16 per meal by cooking at home,” said MyDomaine. “That means if you cook just one meal at home a week that you would normally buy from a restaurant, you could save $832 a year.” Extrapolate those savings out over multiple nights and you could have your down payment in no time!

Make your lunch
Imagine all the money you could save if you were also bringing your lunch to work! Even if you just weave in a day or two a week, you could save $150 a month or more.

Use those coupons
We all get mailers that have coupons for local restaurants, but how many of us actually use them? If you are going to go out for a meal, use that buy one entree, get one free offer.

Do competitive research on credit cards
You could be throwing away money on credit card rates that are higher than they should be. LendingTree has a great breakdown of the best options, hitting on interest rates, rewards programs, and other important details.

Use your points
Saving those credit card points for a vacation? Check to see if your points are redeemable for cash. If not, they may be able to be turned into gift cards, which you could use for daily spending, which would free up that money for your savings.

Mow your own lawn
That $30 per week may just put you over the top, or at least help pay for your closing costs.

Clean your own house, too
Serious savings sometimes calls for sacrifice. Will $200–$300 per month make a difference to your savings? We’re betting the answer is, “Yes.”

Adjust the temperature
You can save money by lowering the temp by a few degrees in the winter and raising it in the summer. According to the U.S. Department of Energy, the savings can add up to 10% per year “by simply turning your thermostat back 7°-10°F for 8 hours a day from its normal setting. The percentage of savings from setback is greater for buildings in milder climates than for those in more severe climates. You can easily save energy in the winter by setting the thermostat to 68°F while you’re awake and setting it lower while you’re asleep or away from home. In the summer, you can follow the same strategy with central air conditioning by keeping your house warmer than normal when you are away, and setting the thermostat to 78°F (26°C) only when you are at home and need cooling.”

Share groceries
Buying in bulk can save you money, but those savings may evaporate if you end up letting all the food you bought spoil. Shop your Costco list with a friend and split up the apples and avocados, and the toilet paper and paper towels, too. You can save hundreds of dollars per year.

Say goodbye to plastic
There’s a worldwide effort to ditch single-use plastic bottles, and doing so could help save the planet while saving you money. Get yourself a $25 Brita filter and stop buying bottled water. You’re looking at a savings of more than $100 per person, per year, in the household.

Stop carrying a balance on your credit cards
If you carry a balance on at least one card every month, you’re unnecessarily paying interest. Wouldn’t you rather be earning interest instead?

Get the right bank
There are plenty of banks that don’t charge monthly fees or ATM fees. That can save you $25 or more per month, and it all adds up. Ally continues to get high marks for its online bank account. “This account pays a modest interest rate and offers free Allpoint ATM uses and up to $10 in monthly reimbursements for other bank ATM fees,” said The Balance. “There are no monthly fees, plus no fees for ACH transfers to or from other banks, no fees for cashier’s checks and no fees for incoming wires. This account also offers free checks, which come in handy for your landlord or anyone else who still wants to get paid like it’s the 1990s.”

Another way to lower your footprint and save some money is by driving to work with a colleague. Rideshare estimates that, “For a person with a longer than average commute (e.g., more than 12 miles) and carpooling 250 days a year, the potential savings in a two-person carpool could exceed $1,500!” For even more savings, trade off cars to lower the wear and tear on your automobile.



Bill Wolfe
E-mail: bwolfe@apmortgage.com
Website: https://www.apmortgage.com/
Cell: (916) 300-8820 Big Valley Mortgage
Office: (916) 960-5438
3000 Lava Ridge Court, #200
Roseville, CA 95661


Bill Wolfe was born and raised in the Avalon Park neighborhood of South San Francisco and was graduated from SSFHS class of 1984 and continued his education at SFSU pursuing his career in finance. Today he is a top producing Licensed Mortgage Planner having excelled in the industry for over 20-years. Bill and his wife Tanya have two sons attending University of Nevada and enjoy family excursions including mountain biking, boating, skiing and most outdoor activities.

For more information contact Bill directly; Office: 916/960.5438  Cell: 916/300.8820  EMAIL    Follow Bill on Facebook


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