Home of Your Own: How to Save For a Down Payment



Buying a house is a big step for most families. One of the things that can be very intimidating about purchasing a home is having enough money to make the down payment. However, despite most people’s concerns, there are proven strategies that can help make paying the down payment feasible. Below are some tips you can use.

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Automate Your Savings

Some people don’t worry about saving for their down payment until it’s very difficult to come up with the money. You should start thinking about ways how to save for it very early. To make sure you don’t absentmindedly forget to do so, make it easier for yourself by automating the process. Create a designated savings account for funds that will go towards your down payment. Tell your employer to deduct part of every paycheck and place it into that account. If you don’t get into the funds, you should eventually have enough.

Address Your Credit Challenges

One thing that can really affect your ability to make a down payment is the health of your credit. Down payments are calculated by using a percentage of the price of the home. If your credit is poor, you may end up being asked to pay a much higher percentage than you would otherwise. You may even be denied a loan outright. Professionals, like those at Financial Guidance Center, know that addressing credit challenges and saving before buying a home makes the process easier. Overall, you need to get your credit back in shape well before you decide to buy a house. Obtain your credit score and credit report from the credit reporting agencies like FICO. Then work to pay down your debt and improve your spending and borrowing habits. Overtime, you should see an improvement. That can certainly help you when negotiating for a mortgage.

Slash Your Expenses

Eventually, you’re going to have to come to terms with the fact that saving more of your income towards a down payment is going to require slashing your expenses for a number of years. Get all your monthly bills together and begin doing some math to determine what you can eliminate to make up the difference. There are probably plenty of things you can certainly sacrifice. For example, satellite TV and going out for movies can be replaced by watching videos on YouTube and renting DVDs from your local library. Preparing your own meals is usually far cheaper than eating out.

While saving enough for a down payment can be intimidating, it is something that anyone with enough self-restraint can accomplish. While you may have to do with less for a period of time, it will be worth it to own your own home.

 

About the author: Rachelle Wilber is a freelance writer living in the San Diego, California area. She graduated from San Diego State University with her Bachelor’s Degree in Journalism and Media Studies. She tries to find an interest in all topics and themes, which prompts her writing. When she isn’t on her porch writing in the sun, you can find her shopping, at the beach, or at the gym. Follow her on Twitter and Facebook.