4 Ways To Save For A Down Payment
It is time to start saving for a down payment. Like, right now. Even if you don’t plan to buy a house for 10 years. Or ever. You want to start saving anyway. For a lot of reasons.
First of all, it is always good to be good at saving money. That skill will serve you well throughout your life. Second of all, the larger your down payment, the better deal you will get on a house. And the more attractive you will be as a buyer, which means you are more likely to get the house that you really want.
And, even if you don’t buy a house after your target date, you will have a hefty chunk of change sitting around that you can use to do a lot of things. More cash is always better than less cash.
Here are 5 tips for saving a down payment that will save you time, money and points, as long as you start following them right now.
Make a budget
No matter what kind of financial move you are planning for, it starts with a budget. Learn how to budget and you will learn how to be a millionaire. Figure out how to spend less than you earn in a given month and you put away the rest. And once you make up a real budget, you will see all the different areas where you can save some money.
Open a savings account
And automate it. Automating your savings will mean you have to spend less time and energy on discipline. Which means that you will have much more energy to devote to building skills, advancing in your career and growing your earning power. That means you can get to your down payment goal faster. Make sure it is a money market account: Don’t just dump your monthly savings into a checking account or a plain old, savings account. And, more importantly, do not put your down payment nut into a hot stock tip or some shaky investment your brother-in-law loves. Sure, the potential is there for profit, but the better bet is that you will lose money. Which will not help you buy a house.
Money market accounts are accessible, insured and you should be able to do a bit better than a regular savings account, as long as you shop around for the right one.
Just get started
Don’t wait. Even if you can’t open a money market account right away, start putting aside some money and keep setting aside that money. Look to take on extra jobs, like bartending on the weekends, that will bring in extra cash and help grow that down payment. But the longer you wait to get started, the longer it will take to get to your number.
Consider your future costs
One good rule of thumb is to subtract your current rent from your estimated mortgage payment, including everything, and save the difference. The obvious benefit is that you are putting away that money. But you are also getting accustomed to that budget as a homeowner.
Where are you in the down payment savings process? Beginning, middle or end? No matter what stage in the process, All Shores Mortgage can help you plan out the next steps. Contact us today to get a conversation started.