Remember back to when you purchased your first home….the excitement of touring Open Houses, the hours researching local neighborhoods, the thrill visualizing how you will decorate the living room, and, of course, the stress of just how to come up with that all-important down payment!
Somehow, you were able to gather the money required to make you a full-fledged homeowner, but we bet that is one part of the home buying process you could have lived without. What if you were starting all over, right now, and had to come up with some cash to put down on your first dream house? Possibly, you’re a first-time buyer looking to join the proud ranks of property owners, but you just can’t figure out how to save for the required down payment. Fear not, Dear Readers, as we’re always here to help.
Listed below are five valuable tips to help you quickly save that down payment and get you into the home of your dreams.
5 Tips For First Time Homebuyers To Save For Your Down Payment
1. Improve Your Credit Score: Yes, you may think you have sound credit, but is it as high as it could be? Contact Experian, TransUnion and Equifax, the three major credit bureaus, to find out your exact credit score. You are entitled to one free credit report every 12 months from each of these organizations, a very important listing that you should study very carefully. It’s not uncommon for errors to be discovered which can be affecting your credit, lowering your score and resulting in a higher interest rate during your pre-approval process. How does improving your credit score actually help you save cash for your down payment? When your interest rate is lower, you won’t have to utilize as much of your saved your money to pay for the first month’s payment, adding it instead to your down payment!
2. Open A Specific Savings Account: In the time leading up to purchasing your first home, set up a savings account strictly for depositing funds to go towards your down payment. Place yourself in the frame of mind that each pay period you have an additional expense—placing cash in this account. View this as an additional bill that must get paid each month, choosing an exact amount to deposit. Sure, go ahead and crunch numbers to see how many months it will take you to reach the required goal. It will not only keep you motivated to save, it will help you schedule a time frame of when you can actually go on the Home Buying Hunt, knowing full well you can afford it.
3. Cut Your Expenses: Everything worth having involves some form of sacrifice. Take a long hard look at your monthly utilities and decide what you could live without. For example, can you cut out your cable bill and get by with free local channels during this time period? Do you really need the most expensive data plan for your cell phone or can you revert to the basics in order to jumpstart your way to becoming a homeowner? Be creative….clip coupons, carpool, open the windows and turn off your air conditioning or set your thermostat just a few degrees lower in the winter. Besides, that will give you a chance to wear that ugly sweater your Aunt Ethel gave you that you could never wear in public.
4. Declutter: Look, the end result is to get you into that new home. Certainly, you have some things that won’t be making the move, why not sell them and get some dough for the savings account we mentioned above? Additionally, when you have more money for your down payment, your monthly mortgage will be cheaper allowing you to have more funds to purchase new items for your new home!
5. Burn The Midnight Oil: It’s amazing how quickly that savings account can grow when you work overtime or take on an additional part-time job, especially when every cent gets deposited. Look for temporary work in an industry that you really enjoy so that you view your position as more of a hobby than a job.
Do you have any other tips or tricks to help save that down payment quickly? Feel free to share yours in the space provided!