For many aspiring homeowners, the largest hurdle to overcome is to save enough for a downpayment.
To achieve the dream of owning your own property most loans will require a downpayment of cash to be able to approve the loan. Options vary between putting 3.5% to 25% down on a home, so saving your money prior to looking for a home is a great idea.
If you are like most people looking at your bank account and unsure how you can get the needed downpayment here are a few tips to help along the way!
1) Cut out unnecessary expenses – This can range from any luxury item or person preference that you may not need. Take a long look at your monthly bank statement and see what can be cut or trimmed down. Do you pay for the upgraded cable package, or can you do without cable at all? How many times do you eat out each week or go to the coffee shop? Have you shopped around to compare prices on car insurance lately? Taking stock of your monthly expenses is the easiest way to begin slowly accumulating money.
2) Set up a separate savings account specifically for the down payment – Creating a separate account for your downpayment will help reinforce the need to fill it up! A separate account will also help remind you not to touch it. If you keep your savings in the same account you spend most of your money out of it is hard to see the progress and appreciate all the hard work and sacrifice you are doing.
3) Pay off any credit card balances – Not only will this boost your credit score but you can avoid paying the interest charges on your monthly credit card bill. The interest you are paying is not getting you any closer to that down payment so bite the bullet and find a way to pay it off.
4) Take a 2nd job or work overtime – The saying goes, “Nothing worth having comes easy”, and that applies to buying a house as well. Can you fit in a few hours a week to help generate a little extra income? Do you have a hobby you can turn into a small side-hustle for cash flow? Think creatively with your skills that are not being used in your regular job to find another source of income. Who knows! This kind of thinking could turn into a new business of job you really enjoy!
5) Ask for a raise at your current job – It doesn’t hurt to ask for a raise if you feel you deserve it. If you have been putting in long hours and doing excellent work your employer will recognize it. And, your employer may also appreciate your honesty and approach.
6) Last but most importantly, tell people you are saving to buy a home – Telling other friends or family that you have the goal of homeownership will drive home in your mind that this is a real thing. Once you tell others they will begin to ask you how the saving is going or offer advice and encouragement. Plus, your friends and family will help you be held accountable for your actions and words. Share with them how you plan to save and why you think owning a home is important. Not only do you need the money for the downpayment on a home, you need friends and family to help fill the home!
Take advantage of this great time to buy a home by having a smart plan! Saving for a downpayment can be tough at times but in the end it will pay off!