How to Save for a Down Payment
You’ve been renting for a while now but lately you’ve been thinking about taking the
leap and buying a house. Maybe you’ve
been dreaming about getting a pet
(something that can be difficult while renting) or maybe you’re excited about
the prospect of having a yard,
or being able to paint a room without the permission of a landlord.
Whatever the
reason, the prospect of buying a home is both exciting and daunting. One
thought that may have crossed your mind is, “How will I afford the down
payment?”
If so,
you’re not alone. Coming up with the money for a down payment is a common
stressor among all potential homeowners. The good news is, there are many ways
you can go about saving
up the money. Here are some ideas to help you start building that savings
account:
1. Re-assess your finances
Do you buy
coffee from a cafe
every day instead of making it at home? Do you have a gym
membership that you rarely use? Look for areas of spending that you can cut
back on while you’re in the home-buying process. Small expenses add up and
cutting even miniscule line items out of your daily spending can make a big
difference.
2. Consider a second job
Don’t worry,
this isn’t a lifelong commitment! But picking up a second job while you’re
house-hunting can help you start building towards that down payment. Use your
primary job to cover current living expenses and put all your earnings from
your second job aside in your savings account.
3. Sell some of your investments
Do you own
stock? Or even have a couple of collectible records that are gathering dust on
your shelf? Consider selling investments that you are not emotionally connected
to for extra cash.
4. Skip the vacations
If you take
an annual vacation,
consider skipping a year or two. Keep that money in your savings account
instead! Eager to get out of the house? Do some research on fun,
affordable day
trips in your area. You may be surprised what there is to do in your
own backyard.
5. Get thrifty!
Consider
selling things you no longer use anymore such as clothes, appliances, old toys
and other knick-knacks. Facebook Marketplace, Letgo or Poshmark are all great
options for selling your used items. This is also a great way to give your
current place a refresh.
6. Remember, every little bit counts
Whether it’s
recycling
your bottles and cans for a refund or saving your loose change, it’s important
to remember that even the small amounts add up.
7. Reduce your current living expense
Moving in
with family members or looking for roommates to share in your rental
costs will help you reduce your current living expense. Remember, this is
temporary – you’ll be in your dream house soon enough!
8. Travel smarter
Cut back on
gas costs by walking more or riding your bike.
Public transportation and carpooling can also be convenient, affordable
alternatives.
9. Create a budget
After you’ve
assessed your newly-trimmed expenses, take the time to sit down and make a
budget. There are many free resources available online that will help you track
your income and spending, and ultimately stick to your financial
goals. Putting everything down on paper can help you gain new financial
perspective. Check out our tips for creating and managing a budget here.
10. Understand your down payment
This is a
big one! Many potential homeowners enter the market not fully understanding
their own finances and the home-buying
process. Before house-hunting, determine a realistic budget for your future
home and communicate this price range to your real estate agent. Spend time
researching the different kinds of home loans so you’ll know what you want before
finding the perfect house.
Follow these
tips and you’ll be ready to buy in no time! While you’re at it, don’t forget to
factor home insurance into your home-buying process. Click on the button below
to learn more about protecting your new home with a homeowner’s policy.
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