When it comes to saving up for a down payment on a new house, it can seem quite daunting. At times, it can even seem impossible – especially if you already have other debts you’re paying off (i.e. student loans, credit cards, car payments, etc.). However, have no fear! We have listed some great tips to help you start saving for that lovely bungalow for two and our list goes to eleven!
- Decide On How Much You Can Afford For A House
This should be your first step. Figuring out your price range for buying a house will help you decide how much you’ll need for a down payment and will also help you factor in your monthly mortgage payments. This will help you see how long it will take you to save up based off of how much you want to put down. Once you figure out how much you can save monthly, you’ll be able to determine when you’ll haveyour full amount ready.
- Reduce Major Monthly Expenses
Do check-ups on car insurance rates, renter’s insurance, health insurance, cable, internet, phone plans, etc. to see if there are better deals out there. Checking on these every 6 months or so can help make sure you are getting the best deal for your money, also many companies will want to compete to get you a lower rate from what you currently have. Cutting your plans / deals even by $10 can add up over time and add up if you are cutting $10 from each of these categories! You could end up saving hundreds and in some cases even thousand of dollars!
- Negotiate Your Rent Or Consider Moving
This isn’t always applicable to everyone’s situation, but if you are able to cut your rent cost, you can save a significant amount of money each month. If you have a good tenant history, try talking with your landlord about lowering your rent or perhaps taking off any additional fees. If that isn’t a possibility, then consider downsizing to either a smaller, cheaper apartment or move to a lower-cost neighborhood. With the money you save from the cost of your old rent verses the cost of your new rent, it can go straight into savings!
- Have A Garage Sale
Now this may sound a bit odd, but you’d be surprised how much money you can make off of a garage sale! You may not make enough to fund your whole down payment, but whatever sales you make can help add to it (and every little bit counts!). Also, if you have big-ticket items consider posting them on eBay, Craigslist, and Etsy!
- Monitor Your Spending
Do you often wonder where all your money has gone at the end of each month? If so, then you may want to consider tracking what you spend your money on. There are multiple ways you can go about this, one of the easiest ways is to go onto Mint.com, SpringCoin.com, or PearBudget.com where they have systems set up to help keep your finances tracked and organized by category. Sometimes, your bank may even have this feature on your online profile. Once you can visually see where all your spending is going, you can start figuring out what you don’t really need to be purchasing every month (like that once a week Starbucks run). Those lattes get expensive!
- Get A Part-Time Job
Getting a part-time job or some side work is a great way to put extra money in your pocket! Since this isn’t a job where you need to use the income for living, you can literally put all of the earnings into your savings for a down payment. Consider doing freelance work or even working at an establishment a few nights a week. You’d be surprised how much you can actually make by having a side-job. You can also look into extra work needing to be done at your day-job. You never know!
- Check Out State And Local Home-Buying Programs
Look to see if your state, county, or local government operates any programs for first-time home buyers. Some are known to offer housing discounts and even provide down paymentloans or grants. Also, you can check in with your bank to see if they have any programs available to their members for home buying.
If you have been saving in an IRA, you may want to check your balance and consider cashing out part of your savings to put toward a down payment. First-time home buyers can cash-out up to $10,000 from an IRA without having to pay the standard 10 percent early withdrawal fee. Maybe don’t use all o
f this for the down payment, but if you’re close to your goal and need the extra last bit, this could be a good option for you.
- Refinance Debts
Pretty much any type of debt you have can be refinanced. You can look into consolidating your loans to bring down you monthly payment, transfer credit card debt by using balance transfers, even car loans by taking out a lower interest auto loan through a new lender. There are lots of ways you can help bring your debt payments down so you can save more for your down payment.
- Automatic Savings Withdrawal
If you know you are the type of person to not actively take the money out of your spending account and into your savings account, you may want to consider having your payroll department or bank automatically deducted a fixed amount out of your paycheck and have it deposited into your savings account. Sometimes when you don’t actually have to do it, you’re not thinking of even having that extra money to begin with. Then the next time you check on your savings account balance you’ll be surprised how quickly everything can add up!
- Track Your Progress
Keeping an eye on your progress with saving for a down payment is a very important part in actually saving for your down payment. By posting a savings graph on your fridge or even having a chart showing your savings monthly, weekly, daily, etc. will help you see how effective or ineffective your efforts are. It’s also a great way to stay motivated by having the results right in front of you on a daily basis and to help you keep chugging along to save extra money!
For more information about beginning your house search, please contact Ole South Homes at 615-219-5644 or shoot us an email at TLewis@olesouth.com. We look forward to hearing from you!