Purchasing dream home can be a reality in life, but the down payment may be a formidable obstacle. In today’s real-estate market, many lenders require a 20-percent down payment for home buying.
A home that’s worth $200,000 would require a $40,000 down payment. Don’t let this number scare you off, however, because you can save up the funds with some careful planning.
Home Buying: Tips To Save Up For Down Payment
Cut the Nonessential Elements
Sit down with your significant other and carefully analyze your spending habits. Cutting a few dollars from each day in the span of a month can create ample funds in no time.
Buying coffee, getting a pedicure and other nonessential elements should be removed from the budget. Purchase generic items at the grocery store instead of the more expensive brands. When you cut down on small items, your savings will increase. Continue to focus on your core objective so that you’re always motivated to stay in budget.
Bank Surprise Income
When you realize that there’s extra money in your bank account, the first reaction is to spend it. Try to think of that money as a savings booster and move it immediately into a savings account.
Allow it to gain interest so that your money is working for you. Income-tax refunds, promotion bonuses and other funds should be treated in this same manner. Your down payment will accumulate a lot quicker when you curb any extra spending of that surprise income.
Work Toward a Promotion
Many people simply need some encouragement to strive for that promotion at work. Saving for a down payment for home buying is definite motivation. Apply for the position, and make yourself an example.
Work hard with precision as your goal. When supervisors see your loyalty and perseverance in a current position, they’ll equate that passion to a possible promotion.
If you earn the promotion, ask about pay increases and bonuses. All these funds should be immediately placed in a savings account to further your down-payment goal.
Be Logical About Withdrawals
Don’t be tempted by funds in your retirement account to pay the down payment. Removing money from any retirement account only compromises your future comfort and costs dearly in penalty fees.
Consider this money to be off limits unless it really is for retirement needs. This may mean that you have to drain most of your personal savings, but these accounts can be replenished with no charges to the funds.
Some families may want to turn to loved ones and borrow money. Although this situation can be beneficial, be aware that these funds need to be paid back.
If the money isn’t returned, your loved ones will technically own your home. Ideally, use your own savings to secure a home. The value will only grow in time.