In almost all cases, homebuyers need to provide some kind of down-payment in order to secure a mortgage; and for first-time home buyers, this probably will mean setting aside enough money to cover that payment. It may seem like a daunting task, but saving for the down payment on your first home can be a truly rewarding experience. By keeping an eye on your spending and following these four steps now, you can set yourself up to close on a house in the not-too-distant future. Here are four tips for first-time homebuyers trying to save for a down payment.
1. Make a monthly budget
Lay the groundwork for a growing savings account by setting up a monthly budget for yourself. Nobody wants to be eating ramen noodles for every meal, but if you lay out a budget that allows for a little bit extra to go toward savings each month, it’ll really start to add up. Just make sure that you set realistic goals for yourself and stick to your budget as best you can. It’s not always convenient to cook instead of going to your favorite restaurant, but you can always find opportunities for saving those hard-earned dollars, if you take a look at where you spend them.
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2. Set up automatic savings
Most of us are good at talking about putting money into savings, but we could probably all do better at following through with it. By far, the easiest and best way to start growing your savings account is to treat those contributions like a part of your monthly expenses. Set your monthly savings allotment to auto-deduct from your paycheck or your checking account, and watch your balance grow every month. Not only is your house a fantastic reward, but you’ll have established a pattern for yourself that will last well after you’ve settled into your first home.
3. Set aside extra cash, windfalls and pay increases
Of course, it’s a lot more fun in the short term to spend your bonus or any “extra” cash on some flashy new technology or a celebratory night out, but weigh that temporary excitement against the more permanent success that comes with the purchase of your first home. Putting aside any additional or unexpected income can go a long way toward getting you in position to afford a down payment. Make sure you stow away your end-of-the-year bonuses, tax returns, birthday money, and anything extra that comes your way.
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4. Cut big expenses
The times when you are working to bolster your savings account is not the time for big vacations, weekend trips, or an even bigger TV than you already have. Before you make big purchases or commit to high-cost trips, always think about how your money is going to work best for you. Instead of trying to see the world, maybe plan some fun things to do around town instead. Substitution of less-expensive alternatives to big-ticket spending is an important piece of the road to your first home.
If you are ready to start down the path toward your down payment, or if you are looking for more money-saving tips, a great place to start is the PrimeLending website, where you can find information about different loans and an idea of how much you’ll need to save. When it comes to the excitement of house-hunting, the agents at Coldwell Banker Heritage are ready to share their expertise and help get you into the right home. There’s never a better time to start preparing than right now, so contact these professionals right away.