How to Save Up for Your First Down-Payment on a House
Even if you are not planning on buying a house for a few years, you need to start planning for the down-payment. When buying a house, the bigger the down-payment that you can pay up-front the more money you will save yourself in the long-run. Saving for a down-payment is a lot different from saving for retirement, vacation or another large purchase. So let's explore some ways that you can start saving money to make your first down-payment.
1. Determine How Much You'll Need to Save
You don't need to know the exact number down to the penny, but it is very wise to get a pretty accurate idea of how much money you are going to need to make a down payment. Sitting down with an experienced Mortgage Originator at First Savings will help you understand how much of a mortgage you qualify for and how much you need for a down payment.
Part of figuring out how much you need to save for a down-payment is determining when you'd like to buy a home. So figure out realistically when you'd like to purchase a home and determine what it will cost and how much you need to start saving every year or month in order to have enough money for a down-payment. Without a realistic time-frame and budget in mind it will be very difficult to save enough for a down-payment on a house.
2. Save in a Smart Place
Since the down-payment you are saving for has a definite time-frame, it is best not to put the money you intend to save for it in risky places such as stocks, trusts, or investments etc. Instead, it is better to put this money into stable savings accounts. You have the possibility of making more money if you invest it, but you also run the risk of losing all, or a significant portion, of the money you were saving for a down-payment. If you are saving for a home stay focused on that, and use other funds for investment.
3. Set-Up an Automated Savings Plan
To prepare yourself for the saving mindset, and to stay on track, set-up a direct way to send a percentage of your earnings every week or month into a savings account, specifically for your future down-payment. You will find yourself saving more money and reaching your financial goals. Removing the temptation and ability to spend a portion of your check will make it easier to save it, and before you know it you will have reached your goal for a down-payment.
4. Bank Those Windfalls
You can shorten your saving period if you bank those unexpected windfalls. This includes tax-refunds, large commissions, gifts, etc. It is easy to get a bunch of unexpected money and spend it, but if you want to save for a down-payment, try to save all or most of the windfalls that come your way every year. Buying a house is exciting. Don't get discouraged by the down-payment. Make a realistic plan and save for it! If you want to make sure you are ready and want to talk to a loan officer, contact First Savings Mortgage today.