One of the biggest reasons holding people back from becoming homeowners is because they don’t have the money for a down payment. However, I am here to say saving for a down payment while renting, living with family or attending college is possible! It all comes down to priorities, planning and executing the plan. Below is a step by step guide how to save for a down payment on a home.
Determine How Much Money You Need
First and foremost you’ll need to figure out how much money you’ll need for a down payment. In order to do this you will have to find out how much you’re approved for, what financing programs you’re qualified for and the down payment that will be required. The best way to obtain this information is to contact a local lender. Not only will they be able to go over your financing options and the down payment requirements, but they’ll also be able to provide you with your estimated closing costs too. By obtaining all of these figures you’ll know exactly how much money you’ll need to buy a home.
Have a Budget
If you don’t currently keep track of your monthly expenses and have a budget, start! By keeping track of your expenses you will be able to see how much money you spend and where you spend it. In the world of credit cards it’s easy for people to spend money. Sometimes money they don’t even have putting themselves into debt without even knowing it.
By creating a budget and sticking to it will make it a lot easier for you to save money. Oh, and creating a budget doesn’t require fancy software you can use a simple program like an excel spreadsheet to track your expenses.
Look for Savings!
Find Places to Save
Now that you have a budget you’ll be able to analyze your expenses and determine where you can save money.
For instance, if you spend $5 every morning on a cup of joe and are able to cut that expense you’ll be able to save over $1,800 in a single year.
If you don’t want to cut coffee altogether, but instead make it yourself you could still save $1,500-$1,600 a year. Another great suggestion is to set up automatic deposits into a savings account, sometimes out of sight out of mind makes it easier to save.
Find Places to Make Money
Make your money work for you! Start looking into no risk or low-risk investment options, like CD’s or money market accounts.
Another way to earn some extra money is by selling personal items you no longer use. Popular items include; electronics, jewelry, even clothes. The best part is you don’t even have to have a garage sale to sell your items. There are countless websites and apps where you can post items for free. The best part is most buyers will come directly to you.
Getting a second job is another option to earn some extra cash. There are direct sales companies out there that allow you to work when you want to work.
Get Organized with Your Time
Set a Timeline
Once you know your closing costs, have a budget in place and know approximately how much money you’ll be able to save each month you should have a good idea of how long it will take to reach your down payment goal. When setting a goal you’ll want to make sure it’s a realistic timeline. But remember life happens, so unexpected expenses may pop-up, so make sure to include a buffer in your timeline. Once you meet your goal you’ll be able to start looking for your new home!
Saving money can be challenging for a lot of people, but if they do their homework and come up with a plan it is possible. Sometimes saving for a down payment may require some initial sacrifices and can take time, but it will be worth it in the end, so don’t lose hope.
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Additional Real Estate Advice from Top Professionals
- Thinking about putting a small down payment down on a home? If so you’ll want to review the PROs And CONs, which Kyle Hiscock did a fantastic job breaking this down.
- You don’t have to put a big down payment down. In fact, as Luke Skar explains there are no money down mortgages available for qualified home buyers.
- Just because you got approved for a mortgage doesn’t mean it’s a done deal. Bill Gassett the different ways to get a mortgage revoked.
About the Author
The above real estate article “How to Save for a Down Payment on a Home” was written by Michelle Gibson of Wellington Florida Real Estate. Specializing in residential real estate since 2001 in Wellington and the surrounding area. Not only does Michelle assist buyers and sellers, she assists landlords and tenants too. She would love to share her expertise and guide you through the entire real estate process.
We service the following areas; Wellington, Lake Worth, Royal Palm Beach, Boynton Beach, West Palm Beach, Loxahatchee, Greenacres and more. If you are considering selling your home, we welcome the opportunity to work with you and list your home with a top Realtor in Wellington Florida