The days of paying no money down for a house are done. Most homebuyers today make at least a small down payment when applying for a new mortgage, and some choose to place 10 to 20 percent of the sales price or more as a down payment. When you crunch the numbers, you may be floored by the down payment amount that you need to save before you finance a home. While you may initially be discouraged, keep in mind that you can make slow, steady steps toward building a nest egg. To get started, you simply need to develop a good home buying plan and implement that plan.
Adjust Your Budget
If you are not currently saving money on a regular basis, you cannot expect to simply find money left over each month to start saving. Budgeting is essential when you are saving money for a new home. You must allocate each dollar toward an expense or toward savings. This means that your estimates for each expense needs to be accurate and realistic. After you have a list of monthly expenses, identify expenses that could be reduced or eliminated. Remember that you may need to make sacrifices now in order to enjoy the benefit of homeownership down the road. Some people will even downsize to a smaller rental home to save even more money each month. Affordability is essential when trying to save money for a new house.
Create Automatic Transfers
Through your budgeting efforts, you can determine how much money you have available to save each month. Some people will manually transfer any money leftover at the end of the month into a savings account. The problem with this strategy is that many people spend all of the money they have. In order to ensure that you save money regularly, create an automatic transfer. The best time for this transfer to be scheduled is immediately after regular income is deposited into the account.
Save Bonuses and Gifts
You may be able to afford to save a few hundred dollars each month or each paycheck, but it will take along time to save thousands of dollars with only those contributions. To add huge chunks of money to your account, save any bonuses that you receive from work. Cash gifts for the holidays, tax refunds, rebates and more can also be saved. You may be able to double your annual savings contributions or more by taking this step.
Increase Your Income
Another great idea is to get a part-time job. Working a few evenings per week or on the weekend may not sound ideal, but it has multiple benefits. You can enjoy the extra income stream, and all of this income could be saved to help you meet your goal faster. Another benefit is that when you are working, you are not spending money. Rather than have a large expense for weekend fun, you can trim that expense down because you will be working. Affordability in your budget is easier to manage.
A smart idea is to learn about home loan programs that you may qualify for. This home finance information can help you to determine how much money you need to save before you apply for a mortgage and begin the homebuying process. For more information on how we can assist you with your new home loan, visit our website, or contact us directly: 678-284-3432.
Edward L. Taylor Jr currently serves as a Clayton County Business Banker with Heritage Bank. With over 15 years of experience in the banking industry, Ed can provide you with the best business products and services to serve your needs now and well into the future.
Vice President Business Banker • 770-515-7032 • [email protected]