How to Save Money for a Down Payment
Thursday, July 28, 2016, 6:00 AM | Leave Comment
Dreaming of owning a home? At Home Improvement Leads, we know how wonderful home ownership can be, but it’s not without its fair share of concerns.
The down payment may be the first hurdle you need to jump, and perhaps the one that stands in your way the most.
Here are some money-saving tips to get you closer to your goal.
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First Things First
Before you can start saving, you need to set up a budget, a goal, and a savings account. Figure out what percentage of a house payment you’d like to put down up front.
Most mortgages require a minimum of 5% down, but that number has dropped to 3% for Fannie Mae.
Create a budget through free websites like Mint.com and track your actual spending versus your goal spending. You won’t be perfect every month, so it’s important to keep an eye on both and create a budget that is realistic for you and your family.
Open a savings account and set up an automatic draft as often as you can, whether you have part of your paycheck directly deposited to savings, or you transfer over a lump sum each week or month.
Deposit any raise or bonus earnings to your savings account, and continue to live off what you’re accustomed to.
Automatic saving can get you further, since that money is “out of sight, out of mind.” You can even hide your savings account from your online banking desktop view.
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Stop Paying Interest and Fees
Banks and credit card companies may seem like they are there to help, but they are also businesses.
If you have a revolving credit card balance, pay it off while you can to avoid paying interest.
Call your bank and ask if they can lower your interest rate. Sometimes even a few percentage points can save you a lot of money.
Once your debts are resolved, you can put those payment amounts toward savings instead.
Alternatively, avoid bank fees as much as possible. Use your bank’s ATM or a store’s cash back option to avoid hefty ATM fees, and read through your checking and savings account policies to pinpoint any potential fees.
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Find Cheaper Alternatives
Budgeting and saving money often gets a bad rap, but it doesn’t have to be boring. If you love to go to the movies, you don’t have to miss out.
Perhaps you see one movie at the theaters per month, but then rent from Redbox or Stream on Netflix on the other weekends.
You can make dinners at home more fun by rotating themes, like Taco Night, Pizza Parties, Mac and Cheese bars, and more family-friendly solutions.
Play music and dance while you cook, talk with your loved ones, and think forward to your next home.
Finding someone you know to do your hair, nails, and massage therapy can also save you money. You may even be able to exchange services with friends!
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Make More Money
If you’re having a hard time saving for a down payment, you may need to sell some belongings or make more money.
Freelancing or picking up a side job can quickly pad your savings account.
Whether you work three extra hours a week or twenty, those funds will add up, since you can deposit them directly to savings.
Look for odd jobs, too, like occasional babysitting, lawn care, home maintenance, pet-sitting, or artistic gigs.
Have fun making and saving money! You’ll be in your new home in no time.
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