5 Tips for Saving for a Down Payment
If you're currently renting and want to buy your own home, you'll need to start thinking about how you'll cover a down payment. Saving for a down payment to buy a house can seem overwhelming, but with a couple of savings hacks, you might be able to save enough to afford a home sooner than you expected. Here are some tips to help you start saving for a down payment as quickly as possible:
High interest rates on credit cards can seriously limit your ability to save. Pay off your high interest rate credit cards. Start with your highest interest rate card. When you've paid the entire balance, close the card, and proceed to pay off the next. At a minimum, transfer your credit card balances to the card with the lowest interest rate.
2. Auto Deposit Funds into Savings Every Paycheck
Set up an automatic direct deposit into a savings account. Commit to never use these savings for any purpose other than your down payment. You might choose a fixed amount, like $200 per month. Or you can specify a percentage of each paycheck so you save more when you get a raise or bonus. Put any bonuses or commissions into to your savings account immediately so you don't get tempted to spend that money.
3. Get a Second Job
While it may not be the most ideal solution for saving for your down payment, getting a second job can help to speed up making your goal. Even temporarily, earnings from a second job can help you make substantial contributions to your down payment savings. Once you know how much you need to save, make a commitment to work a second job for the next 6 months to a year and put all of those earnings into savings.
4. Sell Any Unwanted Items
Think of this simply as a way to declutter and prep for your next investment goal – your home! You likely have some used furniture you no longer use or old clothes that you no longer wear. Sell it to make a few more bucks to use for your down payment. You can sell your items on sites like Craigslist, eBay, Facebook and Amazon to turn your clutter into someone else’s treasure.
5. Plan a Monthly Budget
Often times we don't realize just how lax we become in our spending habits. Eating out a couple days a week for lunch or dinner, coffee every morning from you favorite coffee shop, even the occasional impulse buy all add up and all take away from money you could be putting back in savings. Review your expenses and look for what you can reduce or eliminate. Put the money you would have spent on these items into your down payment savings account.
Think of this simply as a way to declutter and prep for your next investment goal – your home! You likely have some used furniture you no longer use or old clothes that you no longer wear. Sell it to make a few more bucks to use for your down payment. You can sell your items on sites like Craigslist, eBay, Facebook and Amazon to turn your clutter into someone else’s treasure.
5. Plan a Monthly Budget
Often times we don't realize just how lax we become in our spending habits. Eating out a couple days a week for lunch or dinner, coffee every morning from you favorite coffee shop, even the occasional impulse buy all add up and all take away from money you could be putting back in savings. Review your expenses and look for what you can reduce or eliminate. Put the money you would have spent on these items into your down payment savings account.
By implementing some of these tips for saving for a down payment, you'll be well on your way to reaching your goal. When you're ready to apply for a mortgage for a new home, trust in the mortgage professionals at MHQ - Mortgage HeadQuarters to have your best interest in mind. We can help you choose a mortgage program that's right for you and your specific needs!
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