December 6 2019

How to Save Money for a Down Payment on Your New Home

by racheal

Piggy Bank

One of the biggest accomplishments to make is finally signing on the dotted line for the purchase of your very first home, but how exactly do you get to that point? Although it may be everyone’s dream to purchase property in some shape or form, it may not be everyone’s reality. Purchasing a home can cost more money than you can gather in between your couch. You may need to use a few more tactics in order to reach your financial goals. Here are a few helpful ways to help you to curb impulse buys and be intentional about saving up for one of the biggest purchases you’ll probably ever make in your life without having to starve yourself.

 

Figure out how much house you can actually afford

 

Before beginning the process of saving funds for your future new home, it’s best to plan out not only how much you are willing to spend on a home, but more importantly how much you can actually afford. Have a seat and tally up your monthly earned income as well as your monthly expenses to see how much room you have to groove. This way, you’ll have the ability to figure out just how much you can save and how often in order to reach your down payment goal while still living very comfortably. Ramen noodles are a great option for a college student, but not so much for a family looking for a starter home.

 

Look into down payment assistance

 

There are options out there that can save you even more money on the purchase of your new home. If you are a first time home buyer, you are more than likely to qualify for assistance with your down payment. There is also assistance for those with low to middle income and veterans as well. This might mean a little more paperwork and a lot more research, but it also means less money out of your pocket for that dream home of yours.

 

Check your credit

 

Your credit score, as well as your credit history, are pretty important factors when it comes to making a home purchase. The better your credit score, the more likely you are to get approved for a loan and the more options you will have. Keep your credit score in check while doing these things and you’ll be on your way to owning your home soon.

 

• Pay your bills on time

• Use less of your available credit

• Do not open any new credit accounts

• Maintain a mix of credit amounts

 

Open up a separate savings account

 

One huge mistake potential home buyers make is keeping their funds for their down payment in the same savings account meant for other funds, like vacations, or vehicle emergencies. Open a new account specifically for the purchase of your home so that expenses do not get mixed up. 

 

Another good idea is to open an account with another financial institution so that you are not tempted to touch the money you’ve worked so hard to save. The act of borrowing from the account will be much harder to do when the funds are housed in a completely different bank.

 

Set up an automatic transfer to your savings account

 

Make the hard work of saving funds a little easier with automatic transfers through your bank. You can schedule however much you’d like and however often you need in order to meet your goal and can almost forget about it. 

 

Take advantage of your raises

 

For those of you that receive raises from your employer, it would be very beneficial to take the extra money that you receive and place it into your down payment savings account. Many people use the extra funds to buy more rather than to save for more. 

 

Remove credit card numbers from your favorite online shopping websites

 

Spending money unnecessarily can be a difficult habit to break and make it much harder to save. One great suggestion is to remove your saved credit card numbers from your favorite online shopping websites. This will make it less convenient to spend and more convenient to save.

 

Spending money online is much easier these days. You can easily spend hundreds of dollars from the comfort of your home with just a few clicks. Just thinking about having to get out of bed to grab your credit card may help deter you from making those unnecessary purchases as often, which will save you a ton in the long run.

 

Wait a little longer before making a purchase.

 

Another tip that will be helpful when saving is to wait before you make a purchase. Maybe give yourself a few days or even a full week after getting receiving your paycheck to spend money other than bills. Ask yourself the question: Do I really need this? An even better question to ask is this: Did I need this yesterday? That question can be mind-blowing when you realize there was no actual need for the item at all. You can also take the amount of money that you would have spent and place it into your savings account, whether it’s a fast-food meal or a new pair of shoes. 

 

Minimize vacation spending for a year

 

Save hundreds and even thousands of dollars by skipping out on the elaborate vacations for an entire year. This doesn’t mean that you can’t have a little fun with your family. There are plenty of low-cost ways to have a mini-vacay right in your backyard. Choose more affordable options like driving instead of flying to your destinations. Select a location that is a little bit closer to home and make it a family road trip. Sign up for promotional deals to receive discounts for your experience at hotels, amusement parks, and more.

 

Pick up a side job or ask for overtime

 

To help you reach your goal a little faster, ask to work a few extra hours of overtime. If that is simply not an option for you, you can also make use of food delivery apps like Uber Eats and Postmates, or pick up and deliver groceries using Instacart. You can also use Uber or Lyft to offer rides or offer rides for the extra cash. If you have a skill that you’re great at, use it to make a few dollars. You can sell handmade jewelry, baked goods, or even offer resume editing services to go toward your savings goal and pay down your debt.

 

With a little bit of elbow grease and a lot of patience, you’ll be on your way to homeownership in no time! 

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