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9 Ways to Save for a Down Payment

There are loans out there that cover 100% of a home’s purchase price, there are other loans that require a down payment from the buyer. If you don’t qualify for a 100% loan and don’t have much in the way of savings, finding the money to make a down payment on a home can be tough. Don’t let a lack of cash stand in the way of homeownership. Instead, try these nine tried and true ways to save for a down payment. You’ll be surprised at how the little things can add up.

Lower Expenses

Sit down and take a look at your budget. (If you don’t have a budget, now is a good time to get organized and create one!) Where can you cut or lower monthly expenses? What can you eliminate or reduce? You don’t have to deprive yourself of life’s little pleasures—just cut back on them for a little while. For example, if you usually buy coffee on your way to work, try making it at home most days of the week and treat yourself every few days. Take a look at what other monthly expenses can be scaled back. Apps and services like Truebill, Hiatus, and SubscriptMe are good tools to help you keep track of how much you pay for monthly subscriptions and paid memberships. Some other good apps to use for tracking and managing your money include Clarity, Mint, Wally, and You Need a Budget.

Crowdfunding

You’ve seen crowdfunding websites like Kickstarter for business ventures and GoFundMe for personal fundraising. Now you can crowdsource money for your down payment through HomeFundMe. Through this service, which is the only platform approved for helping crowdsource a down payment, qualifying homebuyers can receive up to 1% of their total down payment or closing costs. In addition, the platform’s approved lender CMG Financial will contribute $2 for every $1 raised, up to $2,5000.

Direct Deposit

If you have a problem with saving, try setting up a direct deposit that puts a portion of your paycheck straight into your savings account. Saving is so much easier when you don’t even see that money in the first place. If you don’t qualify for direct deposit through your workplace, you can also set up an automatic draft from your checking account weekly, monthly, or however often you’d like. It’s a highly customizable option.

Skip Vacations

Hear us out. We’re not talking about work overload with no vacation at all. Just challenge yourself to become creative when it comes to your vacations. Try smaller breaks like camping, short road trips, or a staycation. The money you’ll save by refraining from taking big trips for a while can really help boost your down payment. Once you’ve bought your house and are all settled in, you can treat yourself to a big, relaxing vacay to celebrate.

Reduce High Interest Debt

Credit card debt—especially those with high interest rates—can really put a limit on how much you’re able to save monthly. Start by paying off the credit cards with the highest interest rates. Once you’ve paid the highest one off, close that account and pay off the next. If you have the option to transfer the balance of a high-interest card to one with a lower interest rate, take advantage of that.

Borrow From Your Retirement Plan

Your 401(K) or IRA could be the perfect place to find a little extra money for your down payment. You’ll have to check to make sure that your particular retirement savings plan allows you to borrow against it. If so, you might be able to borrow up to $50,000 or 50% of your 401(K) balance, and first-time home buyers could qualify for an exemption of up to $10,000 from IRA early withdrawal penalties.

Sell Some Investments

If you have other investments, consider selling them to raise funding for your down payment. Don’t think of it as losing an investment; think of it as moving those funds into a different investment. When you buy a home and make your mortgage payments, you build up equity in that home. As the value of the home increases, so does your equity and the return on your investment.

Get a Side Hustle

A second job can help you add a good bit to your savings account. Some people deliver pizzas, drive for Uber or Lyft, wait tables, sell arts and crafts, or babysit as a temporary job to make a little extra money on the side. This is a great and honest way to earn extra income that you can set aside specifically for a down payment on a new house. The best part is you don’t have to pay it back! Bonus points if you can make some extra money on something you like doing, like painting or pet-sitting.

Challenge Yourself

Make saving money a game. Instead of looking at reducing expenses as a loss or hardship, look at it as a personal challenge. See how many days in a row you can go without that latte from your local coffee shop. Challenge your work friends to see who can go the longest without going out to eat for lunch. Create a little club where you all brown-bag it and eat together in the break room. The money you save in these little ways make sound like pocket change, but they can really add up over time.

5 Things TV Shows Don’t Tell You About Tackling a Fixer Upper

We won’t lie. The home improvement shows that have taken over the airwaves in the last few years can be pretty entertaining. In fact, we’ll admit to getting sucked into a five-hour marathon session of HGTV’s Property Brothers once or twice. (Hey, those guys are funny and endearing!) The problem is that some home improvement shows can be misleading at best, and downright deceiving at worst. There are quite a few aspects of buying, selling, flipping, fixing, and renovating that they don’t address on television.

1. Buying is more complex than it looks on television.

Finding a home isn’t usually as easy as viewing three houses and choosing the one you like best. Things might work out that way once in a blue moon if you’re lucky. But in reality, it can take a month or more to find that perfect home to call your own. The journey to the closing table often gets left out of the process as well. When a buyer’s offer gets accepted, they celebrate like the home is already theirs. The buyers on many of these programs have already chosen or already own the homes they end up with. That’s because what happens between presenting an offer and actually owning the home can take around thirty days or more, and producers typically don’t have that kind of time to invest in the filming of one episode.

2. Renovation takes time.

Some home improvement shows are good about giving realistic timelines. Others make it look like an entire kitchen renovation gets completed in no time at all. Through the magic of television, three people are able to complete the work of thirty in one weekend, which is completely unrealistic. What they don’t show is just how many contractors are working on a project behind the scenes or the fact that they might be working round the clock to make their deadline. This is their full-time job. Unless you have a ton of free time, expect your reno to take much longer than they do on TV.

3. It also takes more money than you think.

Renovation budgets aren’t necessarily realistic either. Sometimes the contractors and homeowners get discounts or freebies for featuring or talking up a certain product. Some talk about needing a contingency set aside for emergencies or unexpected issues that might arise, but most do not. It’s crucial to have some room in your budget for things you might discover during the course of your renovation, such as a damaged foundation, faulty wiring, or other things that absolutely must be fixed. Another thing they don’t tell you: all those fancy furnishings and decor used to stage the home don’t normally get left behind after filming wraps up. The homeowners have the option to buy the staging decor after the fact, but it seems to come at a premium.

4. Flipping a house is not "easy money."

Sure, there’s money to be made in flipping. But by no means is it easy money. There’s the issue of finding the right deal. And then there’s always the risk of over-improving the home and not making a profit—or worse, not even covering the materials and labor you put into it. Maybe you didn’t do enough improvement or the work isn’t up to par, and you can’t find any buyers. Flipping can be a tricky job, and it’s one that shouldn’t be taken lightly. Just because a flip house is cheap doesn’t mean it’s a good deal. You have to take into consideration the house’s location, how much work it needs, and its resale value based on comps in the area. It’s best for a beginner to team up with an experienced mentor to learn how to do it properly.

5. The drama is ramped up for ratings.

Obviously, the most important thing for a television show is ratings. They can’t make money if viewers don’t find their show interesting. Home improvement shows have been known to crank up the drama to keep their audiences engaged. They make some issues that are actually quick, inexpensive fixes look like a huge deal. Here’s an example.

Contractor: This wall that we wanted to remove is a load-bearing wall, and that is the WORST POSSIBLE THING THAT COULD HAPPEN. Plus, the flooring we wanted is discontinued, and this box of tiles I bought has one that is cracked.

Homeowners: (near tears) Oh, no! How are we going to afford all of this? Now we’ll never have the home of our dreams. This is a nightmare. We should never have bought this home.

The show cuts to a commercial, and we come back to find that the contractor has come up with a simple solution to the ordeal.

Okay, so that example might be a little bit hyperbolic. But so are a lot of the emotions on television. Storylines are embellished, and sometimes "sob stories" are created by producers to create an emotional attachment for viewers.

If you do the job right, tackling a fixer upper shouldn’t be quite as drama-filled as it looks on TV. There’s certainly no harm in watching home improvement shows as long as you realize they aren’t always realistic. Just take these five points into consideration and hopefully you won’t have any unwelcome surprises when it comes time to do your own renovation.

Friday Five // February 2nd, 2018

Got any plans this weekend? Well, you do now! Attend a nostalgic prom, celebrate a beloved book series, watch the Big Game with friends, and more. Read on below to find out what’s in store in the Lowcountry this weekend. As always, the staff and agents at Johnson & Wilson Real Estate Company wish you a very happy and safe weekend!

On Friday evening, the Charleston RiverDogs host their 14th Annual Hot Stove Banquet, featuring Atlanta Braves and NY Yankees great Andruw Jones with Braves World Series Champion, Ryan Klesko. The event takes place at the Crystal Ballroom at Charleston Marriott and features a cocktail hour and cash bar, photo and autograph session beginning at 6pm, a silent auction, dinner, and a collectible table gift. The Hot Stove Banquet benefits the College of Charleston, Citadel, and Charleston Southern University Baseball Scholarship Funds. See the link above for ticket prices and other information.

This Saturday, science, technology, engineering, and math enthusiasts will take over Brittlebank Park for the 5th annual Charleston STEM Festival. The festival is a ”highly visible outdoor event that provides opportunity for engagement and exchange between children, teens, families, and local STEM professionals.” The event runs from 10am until 3pm on February 3rd. Roughly 80 exhibitors will provide hands-on activities, interactive demonstrations, live performances, and family-oriented STEM entertainment. The Charleston STEM Festival is an initiative of the Lowcountry STEM Collaborative managed by South Carolina’s Coalition for Mathematics and Science (SCCMS) at Clemson University.

Saturday night, don your best vintage formal wear and head down to The Royal American for the 1950s Winter Prom! Twist and shout the night away to live music provided by Grace Joyner & Gold Light, who will be playing your favorite hits from the ‘50s as well as their own original tunes. Then DJ Lanatron will take over playing the best dance-worthy oldies. Practice your best “cheese” face, because there will also be a photo booth for those nostalgic prom pics. Doors open at 8:30pm, and tickets are $10 and can be reserved at the link above.

Also on Saturday evening, Barnes & Noble will host Harry Potter Book Night at its Rivers Avenue location from 6pm until 8pm. Wear your best Hogwarts finery and participate in lots of Harry Potter-themed activities. There will be a maze, a Transmogrification Game, a wand-making station, and a bowtruckle-making station, along with coloring and other activities throughout the store. Call the North Charleston Barnes & Noble for more details.

Don’t worry—we haven’t forgotten about this weekend’s big game! Super Bowl LII is a must-watch for many Lowcountry residents, and there will be lots of Super Bowl Specials going on around town. Watch the Philadelphia Eagles battle it out with the New England Patriots at any of the following locations:

Mellow Mushroom Avondale

Frothy Beard Brewing Company

Edmund’s Oast Brewing Co.

Bay Street Biergarten

The Alley Charleston

Buffalo Wild Wings (Multiple Locations)

These are just a few local places hosting Super Bowl watch parties and specials throughout the Lowcountry. There are many more! A quick Facebook Events search will lead you to the perfect place in your neighborhood to watch the big game.

Five of the Most Common Reasons For Closing Delays

According to the REALTORS® Confidence Index, 73% of closings occurred on time in October 2017, but 25% of Realtors® reported a delay in closings. Having a closing date pushed back is not an uncommon thing, and most of the time it’s not a huge deal as long as any issues are taken care of in a timely manner. Since no one wants their closing delayed, let’s look at some of the most common reasons for a delayed closing and how to prevent them.

Problems Obtaining Financing

There are any number of reasons a buyer might have issues obtaining financing on time. From time to time, last-minute issues will crop up with the buyer’s ability to secure a home loan. Even if the buyer has been pre-approved or even cleared to close, their credit and bank statements may be reviewed one final time a few days before closing. The buyer might have had large sums deposited to or subtracted from their bank account. Their credit rating might have changed. They might have lost their job or changed jobs. The lender might decide that they need additional paperwork. Most of these issues can be cleared up with the proper documentation before the lender gives the all clear.

Appraisal Issues

In order to issue a mortgage loan for a home, the bank must perform an appraisal to protect their investment. Issues with the appraisal are an extremely common reason for a closing to be delayed. The hope is that the appraiser will value the home at or above the sale price. If this happens, everything should be fine and dandy. Sometimes, however, the appraisal comes back at a lower number than the price stated in the contract. Lenders cannot approve a loan for an amount that is greater than the home’s appraised value. If this happens, the seller and buyer must do some renegotiating and come to an agreement on a new sale price.

Home Inspection Issues

When red flags arise on home inspections, the buyer and seller must revisit negotiations and decide what needs to be fixed before closing. Closings can be delayed when the seller neglects to complete agreed-upon repairs on time. A good real estate agent will keep on top of the seller’s agent to make sure that repairs are completed in plenty of time, but sometimes it’s out of their hands. All parties need to do their due diligence to make sure this preventable delay is taken care of.

Titling/Deed Issues

Some title-related problems are actually very common and can be resolved fairly easily. Other issues are more serious take longer to correct and can cause a delay in closing. Title-related problems include errors in public records; unknown liens; illegal deeds; missing heirs; forgeries; undiscovered encumbrances; unknown easements; boundary/survey disputes; undiscovered will; false impersonation of previous owner. The good news is that if any of these issues arise after closing, your title insurance policy will protect you as the owner.

Contingencies

Every contract has its contingencies. Some might be as simple as the buyer’s ability to obtain financing or the satisfaction of a home inspection and repairs. Others might include the request that the seller purchase a home warranty for the buyer. Another common one would be specific performance like replacing carpets. These contingencies must be completed prior to closing unless otherwise specified. Failure to do so could cause a delay.

No one wants to face a delay on their closing date. Sellers want to get out and get paid. Buyers want to move in and enjoy their new homes. Of course there are some issues that are beyond anyone’s control, but as long as all parties stay diligent and take care of everything that is expected of them, your closing will more than likely happen on time.