One of the biggest problems for prospective home buyers is saving for a down payment.
In many cases, “a down payment is often the largest single payment a consumer makes in their lifetime and saving for it isn’t easy,” explained Corey Carlisle, executive director of the American Bankers Association Foundation. “However, with a few changes, consumers can put themselves on track to make their home ownership dream a reality.”
With July being the official “American Housing Month”, the American Bankers Association Foundation has taken it upon itself to provide a few tips to consumers who’re struggling to save for a down payment. The general idea is to try and cut down on your bills so you can save more, and look around at possible financial assistance options.
First up, the American Bankers Association Foundation says you’ll need to work out how much down payment you’ll need to buy a home. Once you have a rough figure in your head, the next step is to budget properly so you can set aside as much as possible each month. With that, you can set a timeline for how long it’s going to take.
Now, what you need to do is create a separate savings account, just for your down payment. Be sure to tell the bank to deduct money from your main account and deposit it in the savings account automatically, every month.
The next step is to find ways to cut your monthly bills. Some ideas include checking your car, health and renters insurance plans, your smartphone contract and your Internet plan. Look to see if you can find better deals elsewhere, either through promotions offered by your current provider, or with another provider. This could save you a significant amount of cash each month that can be put towards your down payment.
With that out of the way, it’s time to start looking at local and state home-buying programs you might be eligible for. Numerous states, counties and local governments offer programs aimed at first-time buyers that you can take advantage of. Many of these include down payment assistance that can help first-time buyers to save.
Finally, once you know your exact savings target, be sure to make it easier on yourself by establishing several milestones along the way. You can reward yourself each time you hit a new milestone, so, for example, if you need to save $20,000 for a down payment, you can treat yourself to a nice meal each time you hit a $5,000 milestone. Doing so will help keep you motivated as you strive for your goal.