How To Save For A Down Payment

One of the most common obstacles that homebuyers face is saving for a down payment. While there are many mortgage options that allow you to put little to no money down, these options do increase your monthly payment and will require more income to support. If you are looking for a way to reduce that payment, consider these tips to help you save money towards a down payment:

• Set A Savings Goal: It can be hard to know how much money you will need to save if you do not have a target. Speaking with an experienced real estate professional will help you understand how much to save for a down payment depending upon the type of home you would like to buy. We would be happy to speak with you to help you identify the category of home you are looking for and assist you in setting that goal. 

• Identify Your Monthly Expenses: In order to begin to save money for a home it is important to first understand where your money is currently going. It can be helpful to categorize your expenses into two categories, necessary and unnecessary. Necessary expenses include your current housing cost, food, utilities, insurance, car payment, and any other costs that you cannot live without. Unnecessary expenses will include things like dining out, entertainment, and other luxuries. From there you can determine how much you are willing to cut down on those unnecessary expenses in order to achieve your goal. 

• Cut High-Interest Debt: Paying off any loans with high interest rates like credit cards should be your first priority as these will eat into your savings rate and only increase over time. Showing a significant amount of debt on your credit report will also hurt you down the line when you go to apply for a mortgage, so this should be something that you should minimize as much as possible. 

• Open A Separate Savings Account: One of the easiest ways to boost your savings rate is to separate your savings from the money that you use to pay your expenses. If you set up a separate account then you will not see the money as available to spend when you go to indulge in some of your unnecessary expenses. You can even set up automatic deposits into your savings account that will divert money from your primary account into your savings every time that you get paid. Additionally, most savings accounts offer interest rates that will help to compound your savings over time. 

If you are looking to learn more about how to save for a down payment, take a look at this article from US News. If you are looking to learn more about how much you will need for a down payment or if you are ready to begin your home search, give our team a call today! We would love to help you accomplish your home buying dreams.