Tips For Saving For Your Down Payment
Buying a home is a huge commitment! With good planning and prudence, it can be one of the easiest and best things you’ll ever do for yourself. Your down payment can affect your monthly commitment for the length of your mortgage. If you’re in the position to add to your monthly payments, you can actually reduce the amount of interest you’ll pay and the length of your mortgage. Paying off your mortgage early is a major motivation to cut those expenses now, and save for a larger chunk of change going into your down payment. So, that being said, let’s discuss a few things you can do to prepare and save for your down payment.
- Reduce your debt. Start paying off those credit card balances. Besides increasing your credit score, (which by the way will ensure a lower interest rate on your mortgage), it will free up monthly expenses and allow you to allocate your money in a more efficient manner. Start by paying off the lower balances. If you pay off the smaller balances on your credit cards first, you can redirect the funds towards the larger balances on other credit cards, once those are taken care of. This allows you to start knocking out larger chunks of those high balances much more quickly.
- Reduce your expenses. Create a monthly and weekly budget. Stick to it. Cut unnecessary expenses, e.g., maid service.
- Do you really need cable? How many hours of television do you actually watch each week? Can you cut cable out and stick to those other services offering movies for a minimal monthly fee?
- How about that gym membership? Would it be lucrative to pay the early termination fee and be able to cut out a two-year commitment of monthly payments from your budget? You would be amazed at how many people pay for a membership and don’t go.
- Stop paying for online gaming. Paying $0.99 for another attempt at completing the level to proceed is kind of ridiculous, when you think about it.
- Stop those coffee outings. So, you’re a coffee fiend. We get it. However, dropping a five-spot on a cup of Joe adds up quickly. If you stop three times a week at the local coffee shop and purchase a $5 cup of coffee, that’s $15.00 a week. That doesn’t seem so bad, if it keeps you motivated to go to work. However, that glamour coffee habit can actually add up to $780 a year, just going three times a week. There’s an eye-opener for you! The same goes for eating out. You can do the math. It adds up quickly. Throw some sandwiches in a lunchbox as you brew your own coffee. Focus on the money you’re saving for that beautiful home!
- Cut your food costs. By skipping restaurants and packing leftovers for lunch, you can make a SIGNIFICANT impact on your finances.
- Designate a percentage of each paycheck to go into your savings account. Sign up for direct deposit. Figure out how much you can afford, and have it directly deposited into your savings account.
- Consider an additional part-time job. Place that paycheck directly into your savings account. It won’t take long to see that savings balance increase dramatically from all the changes you’re making.
- Keep the change. Get a large jar. Each time you pay for something in cash, throw the change in the jar: ALL of it! If you buy a pack of gum and you pay for it with a ten-dollar bill, go ahead and chuck that 8 bucks into that jar! You’ll be surprised how quickly that jar will fill up!
Making small changes can greatly affect how quickly your funds increase. Having a low mortgage monthly payment can affect your life in so many positive directions. You’ll only be doing yourself a favor. Start saving for dream home today!