A down High Risk Merchant Account is the initial amount you pay when you first purchase a home. It's your initial investment, and makes up the difference between the purchase price of your house and the amount of your mortgage.
The interest rate you receive from lenders along with the cost of your monthly payments will depend largely on the amount of your down payment. For example, a down payment of only 5% is often subject to extra fees and what is known as private mortgage insurance (PMI) that can add hundreds of dollars to your payments each month.
However, saving up for a 20% down payment is difficult at best and can be taxing for even the best budgeters. For 5 tips on how you can stretch your down payment dollar, keep reading.
1. Tap into your retirement savings.
Most retirement savings and 401K plans allow you to access the funds for a home purchase without penalty or taxation. This can give you access to thousands of interest-free dollars. However, you will be required to repay the money within a designated time frame.
2. Start saving today.
Every dollar counts, literally. If you don't have a savings account, then open one. If you don't do investments, then start once you get your first $500. Saving is about more than a few pennies in a jar, and it should start as soon as possible rather than tomorrow, so avoid putting it off.
3. Get rid of high-interest debt.
While we can't instantaneously pay off our student loans, those are low-interest loans that most can afford to carry while still saving for a down payment. However, high-interest loans or credit (any credit with double-digit repayments) needs to be paid off immediately. Start with the card with the highest interest rate and work your way down. Remember, a high interest rate means cutting down on just one meal out a month and could mean the difference between being debt-free next year or in five years.
4. Look to your family.
The majority of first-time homeowners receive a significant portion of their first down payment as a wedding gift or interest-free family loan.
5. If you're stuck, try the FHA home loan scheme.
The FHA, or Federal Housing Administration, offers a program that provides loan insurance to prospective homeowners who can only come up with a 3% down payment. This loan insurance means you can negotiate a better rate, but you'll be restricted to a maximum house price as dictated by the FHA.