When buying a home, having a decent-sized down payment is important. Not only does it make lenders more willing to work with you, but it could also save you a lot of money in the long-run, especially in terms of interest rates and mortgage insurance. Here are a few tips for saving that down payment.
Have an End-Goal in Mind
Know how much you want to save upfront. Having a specific goal is very important if you want that goal to actually happen. Look at price ranges for the kind of home you want and then decide what percentage of a down payment you want. You can then have a good idea of how much you need saved.
Along with deciding how much to have saved, give yourself and end date. This will keep you motivated and will help you know where you stand throughout the process. Planning a specific amount by a specific date will keep you on track.
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Look at what you spend money on month-to-month. Is all of it really necessary? Probably not. Decide what can be cut out and what needs to stay. Is cable and Netflix really necessary. Maybe just go with he cheaper Netflix option. (Keep in mind, you can always get cable again after you’re in your new, beautiful home.)Take a homemade lunch to work every day and limit eating out on the weekends. Although it may take a little more prep time to bring food from home, it will save you a ton of money in the long run.
Make a budget! Give every dollar a name.
Overall, decide what’s necessary and what’s not. You will have to sacrifice. Remember, you have a dream home waiting for you. You can do it!
Now that you got rid of cable and the daily lunch trips, take the money that you would’ve spent on these areas, and put it into a savings fund. Whatever you’re not spending or putting in other necessary areas, save! Don’t just keep all this money at home or in a typical bank account. Since it will take a little bit of time to save a down payment, put it in a CD or a money market account (somewhere you can put money that you’ll need soon) so that it can grow a little bit while you’re waiting. You might as well make a little money on it while you wait. Keeping it in an account like this will also keep you from using it out of habit.
Don’t Give Up!
Stay motivated! It may get hard, but you can do it! Put up a chart that tracks your progress so that you can see how far you’re coming. Maybe get a picture of your dream house and hang it on the bathroom mirror. Keep your end goal in sight!
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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.