With a little help from the Federal Deposit Insurance Corporation (FDIC), American consumers can overcome the single biggest obstacle to homeownership – saving for a down payment – and increase their savings to a level that will allow them to finally own a home.
The FDIC has designated the week of February 23 through 28 as America Saves Week, dedicated to helping Americans invest in their financial future. The FDIC and is providing resources throughout the week to help consumers reach their goals.
“Saving money on a regular basis in a federally insured financial institution is a proven way to safely and steadily reach your financial goals,” FDIC Chairman Martin J. Gruenberg said. “Whether you are opening your first savings account or have had one for a while, during America Saves Week I encourage you to establish a regular contribution to an insured account. You might be surprised how the habit of regular savings—even in small amounts—can help you make progress to a stronger financial future.”
The recent lowering of the FHA mortgage insurance premiums down to 0.85 percent and the FHA lowering the down payment for qualifying homeowners down to 3 percent could make homeownership a reality for many Americans who previously could not afford a 20 percent down payment or perhaps they got into a home but could not sustain the monthly mortgage payments. FDIC will help out during America Saves Week by encouraging Americans to make a strong commitment to savings and then provide consumers with tools, ideas, and other resources such as educational resources that will help consumers evaluate their options and move them toward their savings goals.
One of the ideas FDIC is pushing in particular is saving through automated means (i.e. through regularly scheduled deposits into a savings account).
The timing for America Saves Week could not have been better for aspiring homeowners who are about to receive an income tax refund. Freddie Mac reported on its blog last week that eight out of 10 Americans who file will receive a tax refund, and the average refund will be $3,539, which would make up a sizeable portion of the down payment with the lowered requirements. It could also be put toward closing costs, which average about $2,500, according to Freddie Mac.
“Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5 to 10 percent,” Freddie Mac wrote in the blog. “And new 3 percent down financing options for qualified borrowers could mean a down payment as little as $6,000 for a $200,000 home.”