How will you save money for your downpayment?
Your home downpayment will likely be one of your first financial considerations when you’re ready to buy a home. If your goal is to forgo being forced to carry home owner’s insurance, paying a 20% downpayment on your new home will likely allow you to avoid it. For a home valued at $250,000, you’re looking at $50,000 for a 20% downpayment. While it can seem an impossible dream, it’s totally within reach, especially with some well-strategized money habits to help you save money like a boss.
Here are a few smart strategies to help you save money for your home downpayment…
1. Open a home downpayment savings account
Setting up a savings account earmarked specifically for your home downpayment is an excellent way to hold yourself accountable. To make your money work for you, look into high-yield accounts. Each month, a percentage of the total you have in your account is added on as interest. The more you save up, the more you earn. It’s like a reward payment for being responsible. Adulting is hard, so why not get a reward for it?
2. Build a budget
Sit down with your finances and assess where your money is going, how much you have left over every month and what things you can realistically cut back on to increase your home downpayment savings. Create a budget you can stick to on a consistent basis. Making it so strict that you feel overly deprived is a surefire way to fail. Allow yourself the occasional treat, but keep your home ownership goal in mind.
3. Limit spending
Do you really need all of those subscriptions? Can you shop at consignment stores for a while? Is eating out leaving a hole in your bank account? Every person is different with their wants and needs, but we can all make certain concessions. Be honest with yourself about where you can cut costs, and then follow through. You may find that you actually enjoy cooking at home, and your home brewed coffee might actually taste better than Starbucks.
4. Fork over the extra money
Decide now that any extra money you receive will go straight to your home downpayment fund. This includes things like birthday money, work bonuses or other financial gifts. Be firm with yourself on this because it can grow your home downpayment fund much faster than saving money from your budget, alone.
5. Sell some stuff
Either host a garage sale or put your things up for grabs online. If you’re not using it and it’s in good condition, you’ll reap the benefits of both clearing out your house and being financially rewarded for doing so. It makes less to move, and clearing the clutter helps you feel more centered during the home buying process.
6. Save money with lists
Before going shopping, a make list. Know exactly what you need, and do not stray from the path you’ve laid for yourself. Having a spending plan in place before you shop helps avoid spending more than you intend.
Do yourself a favor and opt out of as many subscription emails and newsletters as is practical. There’s no need to tempt yourself with sales for superfluous items when you’re working hard to save money for a home downpayment. This one is especially important if you’re someone who tends to buy something just because it was on sale.
8. Automate how you save money
Set it and forget it. Most savings accounts allow for scheduled savings where a specified amount from your main account will automatically move into your savings account. By automating this process, you can save money for your home downpayment without any extra manual input, saving you time while you save money.
Let’s discuss your home downpayment options
If you’d like to talk about your options for purchasing your dream home, contact me today at 408-472-0817, or click the image below.