The total land surface in the US occupies about 2.3 billion acres. Corporations and private individuals own about 60% of this land, covering about 1.4 billion acres. The federal government owns about 29% of this land, while tribal reservations sit on 2%.
If you’re dream is to own land, you’ll join the list of landowners. But before that, you’ll need a down payment, typically a percentage of the parcel’s value. Land loans can present a challenge since down payments are typically higher than a traditional home loan.
It takes discipline and patience to save as you also fund other expenses such as student loans and 401(K) deductions. Fortunately, there are several creative ways of saving for a down payment. Here is a quick guide.
Avoid High-Interest Debt Rates
When saving for a down payment, you should maximize the amount of money ending in your accounts. Start by paying off any high-interest debt rates, whether it’s a credit card or loan from a financial institution.
Once you pay the debt, don’t take any soft loans. If your business relies on credit cards for mid-month restocking, go for options with the lowest interest rates.
A Side Gig Can Help You Raise the Down Payment
Sacrifice is what stands between living in a rental and building your own home. It’s not uncommon for Americans to work two jobs a day. However, you can go a little harder and get a side gig during weekends.
Weekend gigs tend to pay better than weekday side hustles. You can turn your car into an Uber cab or rental vehicle.
You can also turn your hobby, such as gymnastics, into side income. If you’re an expert in any field, many people would love to consult you at a small fee. Whether online or in person, this extra income can go directly to your property down payment savings account.
Live By Your Standards
Living by your standards simply translates to freezing unnecessary spending habits. You can afford it, but again, you have a bigger goal of owning land. You can start by adjusting shopping habits. For instance, if you visit Starbucks every day and order a Grande, you’ll spend $4.10 on average. That translates to just under $1,500 per year and almost $7,500 in five years. It may not seem like a lot of money but combing through your finances to see what can be cut out will help you save more than you think!
Alternatively, you can make major changes like moving to a more affordable home or paying off automobile debt in order to save. An expensive house will likely consume the lion’s share of your earnings, which isn’t a priority when saving for a down payment.
Liquidate Some of Your Investments
Liquidating investments to save for property down payment doesn’t make you lose anything. It’s like transferring cash to another asset with better investment returns. Remember, land is a rare asset in that does not depreciate. As demand for land grows, the supply will always stay the same!
Owning Land Is A Huge Achievement
As you save for property down payment, look for a reputable lender with a better understanding of the current land loan rates. The lender should also have resourceful information such as future rate forecasts in the area you’re planning to buy-in.
Owning land is a dream many people wish they can realize sooner. Now that you know how to save for a down payment, don’t look back. Open a savings account and automate fixed deposits every month.
When you’re ready, Land Line Lending is ready to get your pre-approved and financed! Contact us to discuss your land loan needs.