If you’re thinking of buying a home anytime soon, the down payment is probably something on your mind. How in the world are you going to save up that amount of money? Here are a few tips we’ve thought of to keep in mind when you’re saving for a down payment.
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Have a Goal
Start by knowing how much you need/want to save up and when you want the money by. If you just start putting money aside, with no timeline or amount in mind, you’ll lose motivation real quick.
First decide how much money you want to have saved. To do this, have an idea of how much your next home will likely cost and decide on what percentage of the down payment you’re going for or need depending on the loan you’ll likely get. Have this amount set in stone and keep it in mind. As you see yourself getting closer and closer to that amount, it will help encourage you to keep going.
Set a timeline for when you want/need the money by. This will help you take it more seriously. If you know that you want the money in the next two years, you’ll be less likely to use the money on a new TV a few months before your two year deadline.
Having a goal will also put you on the same page as your spouse, or whoever you’re purchasing a home with. Having a common goal is vital for success. Imagine that amazing, trendy home you’ll be getting at the end of this. It will be worth it!
Cut Out Unnecessary Costs
Do you really need to buy a new car? The old one will work just fine for now. Yes, the starter may need to be replaced, but spending a couple hundred dollars on a repair or two will be way cheaper than purchasing a whole new car with a new monthly payment. Is cable necessary? Netflix may be sufficient.
Go through your monthly spendings and decide what can be cut and what needs to stay. Be willing to sacrifice a little bit. Again, picture that home you’re saving for, and remember your goal. The more money you put in the down payment savings, the more quickly you’ll get to move into that house.
Aside from just cutting costs, try to spend less day-to-day. Instead of going out to lunch every day, bring a lunch from home. If you’re an impulse buyer, go to the store less. Don’t let yourself buy unnecessary things. Remember the more you spend on stupid things you don’t really need, the longer it will be until you get to move into that home.
Save in the Right Place
Don’t just keep all that money you’re saving at home. Because it’s a substantial amount of money and will be sitting there for more than a few weeks or months, you’ll want to keep it somewhere it can grow. Adding it to a CD or a money market account (somewhere you can put money that you’ll need soon), will help it grow a little bit in the waiting process. Don’t buy stocks or bonds with it, or any other high-risk investment. You don’t want to lose all your money by the time you reach that deadline you set. Keep it somewhere where it can safely grow but be accessible when you’re ready.
Saving for a down payment may seem like hard work. It is, we’re not going to sugarcoat that for you, but we promise it’s worth it. Creating a chart that tracks your progress can help keep you motivated. Maybe even have a picture, or pictures, of the kind of home you hope to buy. Remember that all your hard work will pay off and we’ll be able to find you that home you’ve always been dreaming of. DON’T GIVE UP!!! YOU CAN DO IT!
Read our blog on affording your dream home here.
Have that down payment saved and ready to buy a home?
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If you want to learn about some financing options, or if you’re looking to get pre-qualified, contact Parker Turk at Sun American Mortgage Company: 602-616-3774.