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July 3rd, 2017 by

8 Ways to Save For A Down Payment On A House

Simple Ways to Save for a Home

Coming up with the down payment for a home is one of the biggest roadblocks for many first-time buyers. Many lenders require a down payment of 20 percent, which can be quite a chunk of change. Although there are lending programs that can take that percentage as low as 3.5, with 20 percent you'll have a better chance of getting approved for a loan, a lower interest rate, more equity in your home, and a lower monthly payment. There are closing costs to consider as well. While saving for a house may seem daunting, there are simple ways to cut costs and squirrel money away.

  1. Create a Monthly Budget
    Creating a monthly budget can help you analyze your spending habits and make a plan on how to cut some unnecessary extras. If you are married, sit down with your partner and look at all of your expenses—not only basics such as food, utilities and rent; but also entertainment, dining out, and things you may often buy like clothing, shoes and toiletries. Saving doesn't have to be difficult--if you are addicted to shopping at a high-end grocery store, consider buying store brand items instead of brand name. The pennies you save can add up to big bucks.

    Once you make a budget, stick with it. Keep receipts for incidentals to see exactly where your money is going. Staying on track and watching the balance of your savings account rise will keep you motivated.

  2. Create a Dedicated Savings Account
    Create a savings account that is for your housing fund only and make it off-limits no matter what. Use your regular checking account for bills and other expenses.

  3. Use Direct Deposit
    One of the best ways to save is to divert funds before you get your hands on them. Ask your employer to split your paycheck and have a fixed amount deposited into your savings account each payday. If you've created a solid budget you won't even notice the pay cut. If you are self-employed, set a fixed amount to put into savings on a specific date each month, and stick to it.

  4. Forgo High-Ticket Items
    You can save more quickly by cutting large expenses. For example, holding on to your car for another year or two instead of buying a new one will help you save thousands in a fairly short amount of time. Want a new boat? You can buy it after you purchase your new home.

  5. Downsize
    Moving from a two-bedroom apartment to a one-bedroom can reduce your rent by up to 30 percent. If possible, downsize and live small for a while. Deposit the unused rent you would be paying into your housing fund.

  6. Work More
    If you are eligible for additional hours or overtime, grab every opportunity you can to work more. You may also consider taking a second job, even if it's only one day a week. Put all the money from extra hours or your second job into your savings.

  7. Let Others Know You're Saving
    Staying on a strict budget can be easier with the support of the people around you. If your friends and family know why your spending habits are changing, they will most likely cheer you on in your quest for a new home.

  8. Don't Beat Yourself Up
    Changing old habits can bring up complicated feelings. If it makes you sad and frustrated, you may not be as successful at saving. Treat yourself to simple pleasures once in a while. The idea is to save money and enjoy life, not to deny yourself everything you love.

Our experienced real estate agents can help you understand the process of saving for a down payment and purchasing your first home. For more information, contact Cressy & Everett Real Estate.

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