With rent prices on the rise all over the country, the pressure to buy a house is real. So what’s stopping you? For many people–it’s the down payment. And understandably so!
But it doesn’t have to be! With a few adjustments to the way you save and spend plus the drive to own a home of your own–you’ll realize it’s not all that bad.
Save For A Down Payment Like A Pro With These Tips
First things first, determine just how much you’ll need to save.
Schedule a sit down with a lender to discuss your qualifications. With some basic financial and personal information, a mortgage lender can give you a good idea of how much you’ll be approved for.
While traditionally, lenders prefer borrowers who can put 20% down, you can get away with paying less–but typically not without a higher interest rate.
Keep in mind, just because you can put less down, doesn’t mean you should. The more you put down initially, the lower your loan and monthly payments will be in the future.
Another important first step is determining when you’ll need to make the big payment by. What’s your time frame?
The less time you have, the more seriously you’ll have to save. If you leave yourself a good bit of time, you’ll have more flexibility with your saving goals.
Here are our tips to help you conquer your down payment.
1. Open A Savings Account
Open a special account and designate it as your down payment savings account.
Commit to transferring a fixed amount (set up automatic transfers if you can!) into the account each month. Focus only on growing the amount in the account. Never use these savings for any purpose other than your down payment.
If your desire to purchase a home is strong enough, you won’t think twice about the sacrifices being made while saving.
2. Cut Monthly Expenses
Lay out your monthly expenses and identify areas you can potentially save. While some monthly costs are non-negotiable, there are likely areas to reduce or eliminate costs altogether. Then take the money you would have spent on those expenses and put them into your down payment savings account.
Here are a few ideas to help you cut monthly costs:
- Downgrade your cell phone, cable, and/or internet plan
- Seek out public transportation or carpool opportunities to save on gas, parking, and vehicle maintenance
- Decrease utility usage (cut that shower time in half my friends!)
- Terminate the memberships and subscriptions you don’t use regularly (gym, newspaper, magazine, music, food delivery, etc.)
- Cook (and pack) your own meals at home to eliminate eating out or getting take out
3. Reduce Debt–Starting With High Interest Rate Debt
High interest rate debt can set you back big time when attempting to save.
Focus your efforts on paying your high interest rate debt of first. Once you’ve paid the entire balance, close the card and proceed to pay off the next. At a minimum, transfer your credit card balances to the card with the lowest interest rate and get it paid off. Then save, save, save.
Statistics from NASDAQ show the average American household has more than $16,000 in credit card debt, the average auto loan exceeds $30,000, and the median student loan debt is more than $49,000. Add on top of that the average $173,000 mortgage and you’ve got yourself a recipe for disaster.
Put yourself in a position to succeed as a homeowner–get rid of your debt ASAP.
4. Get A Second Job
The obvious but not so easy option.
Earnings from a second job, even temporarily, can help you make substantial headway on your down payment savings goals.
5. Take Advantage Of Special Programs
There are many local, state and federally funded programs that provide down payment assistance and/or affordable rates to qualified borrowers.
Look into mortgages guaranteed by the Federal Housing Administration, Department of Veterans Affairs or Department of Agriculture which generally require little to no down payment for those who meet their qualifications.
The North Carolina Housing Finance Agency has a program called NC Home Advantage Mortgage, which combines affordable, fixed-rate loans with down payment assistance of up to 5% of the loan amount. First time buyer in N.C? Read more.
Our point is, there are people out there looking to help you with your down payment–not just bury you.
6. Have A Yard Sale
Collect any new or gently used belongings and host a yard sale.
Whether you choose to host a physical yard sale or you go the digital route, there are people in your area willing to pay for the things you don’t use. Post a few things on Facebook’s Marketplace, Letgo, or craigslist and see who bites! When you make a sale, you know what to do–deposit it into to the down payment account!
And if you’re having trouble letting go of things, just think about how easy your move will be with less stuff to pack!
The decision to purchase a house is a big one. It will likely be one of the biggest purchases you make in your lifetime. See all of our tips for real estate buyers like yourself.
While saving for the down payment is something you’ll have to conquer yourself, our team of knowledgeable Realtors will be more than happy help you through the rest of the home buying process.
Let’s set up a time where we can discuss tackling the real estate buying (or selling) process together. We understand the challenges you’ll face throughout the process, like saving for a down payment, and know how to help you overcome them.