Biggest obstacle for first time home buyers can be the down payment

Real Estate agent with home buyer A lot of factors play into the decision to become a first-time home buyer. It takes confidence in the market, in the economy, and in your own financial strength as well as requiring good credit, a steady job -- and a down payment.

Those down payments can range from 3% at the low-end (for FHA loans) to an average 20%, says mortgage expert Arnold Martin.

Ana Soriano, 32, had everything but the deposit."I was just living paycheck to paycheck. It was always tight."

A couple of years ago, Soriano, a consultant for a local credit union in San Francisco, decided to make some changes.

Anxious to fulfill her dream of becoming a a first-time home buyer, Soriano talked to numerous financial advisers and attended several seminars to learn more about the process (and now works with a down payment assistance program). She knew she was going to have to make saving a top priority.

That meant not only cutting her biggest expense -- her rent -- by moving back in with her mother, but it also meant making other, smaller changes, such as cutting her car insurance costs, and ultimately managing her money more efficiently:

Know your resources
Soriano took a good, hard look at what was coming in and what was going out. First stop:, a popular, free online budgeting tool."You get a good picture of how much you can actually save based on what you earn, and even tips on how you can earn more." She has also mastered the art of couponing =- who knew you could transfer prescriptions from one drugstore to another and get a $30 gift card? -- and has fun, but only on the cheap. Soriano's favorites are, and

Pay Yourself First
The bottom line is you don't miss what you don't see. Soriano has a fixed amount taken out of every paycheck and automatically deposited into a savings account."In the past, I would just spend it, and I couldn't even tell you what I spent it on," she says.

Just Ask
Check your vanity at the door. Soriano has negotiated for everything from dental work (She recently saved $200) to clothing to the maintenance on her car.

Manage Debt -- The "Right" Way
At one point, Soriano had 10 credit cards. She was scrambling to pay down debt, and was getting walloped with fees. When she was turned down for a car loan, she decided to turn things around. "I never wanted to be in that situation again," she says. That meant coming up with a strategy to better manage debt; not just pay it down as quickly as possible."It had become a vicious cycle, and made me strapped for cash."

Soriano consolidated her debt with a balance transfer, and suggests you consider doing the same. Granted, you will find that offers have gotten more restrictive lately -- terms are shorter and transfer fees may be as high as 5% of the balance -- but there are still some good cards out there, like the Citi Platinum Select MasterCard: offering 0% balance transfer for 18 months.

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