Homebuying: 5 Surefire Ways To Save For Your Down Payment

By, Tiffany Wagner  | Special To Corridor News

For most people, to own a home is a dream. Needless to say, it’s the biggest and most significant investment we make during our lifetime. The importance or essence of such a financial decision makes homebuying appear quite daunting.

However, just like in most cases, the key here is to take the first step. If you plan to buy a home soon, then the first step would be saving enough cash for the down payment of the home. In case you didn’t know, giving a big amount of down payment when buying a house, can help you save lots of money over time.

For a little help, this post will walk you through the ways on how you can save for the down payment of your future home. So, take a read!

What Is A Down Payment?

This amount of money is the portion of the value of the property, by which people pay directly with their own money on its purchase. The rest of the property’s value is covered by a mortgage or housing loan, for example, installment loans.

Although there are housing loans that do not require a down payment, financial advisors still suggest making a down payment because it will make the loan taken smaller in the long run.

Of course, it will translate to shorter loan terms. Additionally, it will make accrued interest and monthly payments smaller compared to when no down payment is, for the most part, made. Moreover, loans that require a down payment upon its acquisition have higher approval success rate because it is an indication that the buyer has the capability to repay the loan and has an excellent financial standing.

Gradually Raise That Down Payment

Sadly, building or saving money for a down payment can be a difficult task itself. And with the property prices today, it might seem that housing loans without a down payment become the best option for some.

But through a little effort and some strategy, you can, without a doubt, be on your way to get the house you desire with a down payment in place. The following are five ways to save for your down payment, and get the dream home you want:

Save Money

There is a saying that states that you must first pay yourself before you pay anyone. Thus, whenever you get your paycheck, be sure to set aside about ten percent of your salary into your savings account.

Conveniently, create a personal savings account. However, make one with the same bank that holds your salary. It will enable you to cut a portion of your paycheck and send it automatically to your personal savings account. In return, even before you have the urge to spend, savings are already reserved.

Going Back to Basics

The notion or scheme is to save money for your dream home in all ways possible, such as your everyday expenses. For instance, instead of your regular Starbucks order, you can opt for an instant coffee. Rather than eating out,  have more home-cooked meals.

Just like saving a portion of your salary, going back to basics might not appear to generate much savings. And it might be completely uncomfortable at times. But in the long run, the money saved can be undoubtedly vital.

Investments

Let’s face it. Your savings can only help you so far. And the ideal way to leverage what you have saved and eventually move closer to your goal is to let it grow through investments. However, you don’t need to invest that much. You can begin with at least 100-500 dollars and invest in a time deposit or mutual fund to gain interest.

Extra Jobs

Consider putting in extra work to have additional income. Aside from working with your current job, you can do freelance work or part-time jobs. These sidelines are the best way to boost your income while working at your own pace and time. With the technology and communication advancements, a lot of job opportunities can be discovered online for fundamentally any form of skill set.

Make Your Credit Card Payments On Time

If you cannot pay an item on real money, then you bluntly cannot afford it. It’s important that before buying a home, you sort out your finances. And whether you should continue or not continue using a credit card is a paramount decision to make.

Although the safety and security of not carrying cash and the benefit of making purchase almost anywhere using a credit card, it’s not sufficient to pay for the interest accrued. Even if it is enough, you must ensure to pay your credit card bills on time to avoid unnecessary, additional fees.

Takeaway

Before you start saving a down payment for your dream home, you need to know the exact amount you will need to save. Also, you need to set a timeframe. With these things in mind, you need to look for the ideal way to save for your down payment. Moreover, make certain that your savings goal is indeed doable.

Purchasing your dream home can be an intricate, long process that needs much of your savings. However, consider it as a prep for homeownership.  You will have all those costs even after acquiring the property as well. Therefore, prepare both your psyche and finances for the additional costs that homeownership conveys.

Tiffany is currently taking a degree in Investment Management Analysis in her junior year in college. In the context of decision making and business strategy, she focuses on finance and information interpretation.