7 Tips to Help You Save for a Down Payment
If you are planning to buy a home for the first time in the near future, you may want to start planning now. Preparing to buy a home in Mid-Missouri early can help to make the process easier. Now is the time to start saving and thinking about what you, as a first-time home buyer, should do. To learn some tips on how you can start preparing and saving for a down payment, take a look below to find some pointers from the expert team at Devine & Associates.
1. Figure Out How Much You Will NeedBefore beginning to set goals surrounding your finances, figure out how much you will need for a down payment. Typically, 20 percent of the home cost is a good goal for down payment savings, although it can range as low as 3.5 percent. Many new homebuyers today are putting down closer to 5 or 10 percent. Talk to your agent about how much you will need before beginning to budget for your future home.
2. Open a Savings Account Specifically for Your Down Payment FundsWhen saving for any major purchase, having a savings account that is just for savings toward that expense can help you prioritize the goal and can keep you from the temptation of using those funds elsewhere. Try to transfer a certain percentage of each paycheck into the account - even if it is only a small amount, consistently adding a little bit to your fund will add up. Consider a bank or financial institution that will automatically withdraw a percentage of each deposit and relocate those funds into your new savings account.
3. Use Cash Instead of CreditAttempt to use cash for your everyday spending as much as you can, as opposed to using a credit card. Being able to see and feel the cash will keep you more mindful of how much you are spending and what you are spending it on. Also, by refraining from using your credit cards as much as possible, you will be able to lower those payments. Overall, the goal is to keep more money in the bank that you can put toward your down payment.
4. Commit to Putting any Additional Income Toward Your SavingsAs much fun as it is to get that tax return money, and as tempting as it is to spend that “extra” money on something new and fun, think about the big picture. If you can commit to putting any monetary gifts, tax returns, extra income, etc. into your savings for a down payment, you will be that much closer to being able to purchase the home of your dreams. You will also fast-forward the process of saving money to buy your future home.
5. Think Before You Buy!Just because you are trying to save toward your ultimate goal of a new home, does not mean you have to cut off all spending on things you enjoy. It does mean, however, that you have to put more thought into what you are purchasing and the importance of that purchase. Think about it this way: buying those extra things takes you a few steps back from achieving your goal. If the purchase is worth it to you after you have thought about this, then go ahead and spend on you. Just remember that you have an end goal, and you want to get to this goal as quickly as possible for you.
6. Set Achievable GoalsThroughout the process of saving for a down payment on a new home, remind yourself that even small amounts add up. Instead of focusing on one giant number that you must get to, try to break it up into smaller, more manageable amounts. If you have smaller goals, you will be more likely to continue to save and not get frustrated and overwhelmed. Consider trying to save $100, then another $100, and so on. By putting your financial goals into perspective, you will be able to actually see that your savings of $15 or $20 actually do add up, and you will be able to recognize each saving (no matter how much the amount) as the accomplishment that it is.
7. Keep Track of Your ProgressAs mentioned above, it is important to recognize your accomplishments toward your goals. By following your progress toward being able to afford a down payment, you will be able to recognize your achievements and will be more motivated to continue saving. Consider creating a savings graph and posting it somewhere (like on your mirror or on the refrigerator) that you will see every day. This way you will constantly be able to see your progress, and by viewing this visually, you are more likely to continue your savings toward your ultimate goal of a new home.
As you start to financially prepare for this big investment, our team of real estate agents in Eldon, MO would be honored to be a part of this very important step in your life. If you are ready to start preparing to buy your first home, give our expert team of real estate agents a call today! We can help you get started on the home buying journey and help advise you on how much you need to be saving for a down payment. We'd be happy to help you through the real estate process and get familiar with our current listings that may fit your requirements. Contact Devine & Associates today to get to know one of our agents and learn how we can help you complete your first home purchase!