5 Down Payment Saving Tips: How Save Up For a House
There's no doubt that buying a home can be a daunting process, but it's also an incredibly rewarding one. If you're looking to buy a home in the near future, one of the most important things to figure out is how to save for a down payment. Once you have a down payment saved up, you've cleared the most difficult hurdle in the home buying process—and freed up money to explore your future mortgage options, potential home upgrades, and landscaping plans. These tips will help start you on your way to owning your dream home!
Calculate How Much You Need for a Down Payment
In order to do this, you'll need to know the price range of homes you're interested in and the average down payment percentage in your area. Down payments range from 3–20% of the purchase price, so it's important to have a good idea of what you're aiming for. Historically, home buyers were expected to put at least 20% down, and while that expectation has lowered considerably, typical buyers are still encouraged to put 10–15% down.
Create a Budget and Stick to It
Once you know how much you need to save for a down payment, you can start putting together a budget. Determine how much money you have coming in each month and what your regular expenses are. Then, factor in your savings goals and create a plan for how much you can reasonably set aside each month. It's important to be realistic here—if your budget is too tight, you may get discouraged and become more likely to give up on your savings goals altogether.
Save Money On Your Monthly Expenses
One of the best ways to free up money to save for a down payment is to cut back on your monthly expenses. Take a close look at the monthly budget you created and see where you can make adjustments, even if they're small. You may be surprised at how much money you can save by making simple changes to your spending habits.
For example, if you're paying $14.99 monthly for a little-used streaming service, cutting that expense can save you $180 over the course of a year. Making a few cuts like this in your expenses will rapidly add up.
Invest in Low-risk Financial Products
After saving up some money, you may want to choose a low-risk financial investment, such as a CD or savings account. This will help you earn interest on your down payment while keeping it safe and accessible. Keep your home buying timeline in mind, however, as you'll want to ensure penalty-free access to your savings.
The stock market is known for its volatility, so if you're trying to save for a down payment on a home, be sure to keep that in mind in order to minimize your risk. REITs are a popular type of real estate investment because they're a hands-off way to purchase shares of property.
Keep Up the Savings Momentum
Once you've started saving for a down payment, it's important to keep up the momentum. Stay disciplined with your budget and continue setting aside money each month. And be prepared for the months that don't go according to plan: life happens, so expect the unexpected and remain flexible. Even when you've veered off-course, your savings journey is always one good decision away from being back on track!
Increase Your Savings, Hit Your Down Payment Goal
Saving for a down payment on your dream home doesn't have to be overwhelming. If you can create a budget, make some small changes to your monthly expenses, and maintain discipline and consistency in saving, you'll reach your savings goal in no time. These simple steps will help you reach your goal of homeownership in no time! Are you ready to get started?