How to Save for Your Down Payment

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How to Save for Your Down Payment

Are you excited about buying your first home soon? The main obstacle that may be standing in your way is lining up enough money for a down payment and closing costs. You can generally estimate closing costs to be approximately 3 percent of the sales price. Depending on the financing terms that you qualify for, you may need at least 5 to 10 percent of the sales price for the down payment. While you will need a sizable chunk of money to buy your first home, you can make faster progress with your efforts by following a few tips.

Trim Your Expenses
Finding extra money to save may be easier than you think. After all, you may spend a few hundred dollars or more each month on non-essentials. You can easily stop eating out at restaurants, avoid buying extra clothes except when absolutely necessary and eliminate your gym membership. Other ideas include switching to generic foods at the grocery store, adjusting your cable or streaming video services and downgrading your smartphone plan.

Automate Savings
The easiest way to save money regularly is to set up automatic transfers from your checking account to your savings account. After you have trimmed your expenses, you can potentially set up an automated transfer of several hundred dollars or more each month. At the end of a year, you could have thousands of dollars sitting in your savings account.

Sell Non-Essentials
You can give your savings account an extra boost by selling non-essentials. When you move into your new home, you understandably do not want to bring a bunch of items with you that you have not used in years. Now is a great time to sell small appliances, old books, video games and more. Whether you sell these items through a garage sale or online, save all of the money that you generate.

Save Windfalls
Many people receive at least a couple of major windfalls annually. This may include an IRS tax refund, a work bonus and more. When you receive extra money, stash it away in your savings account. Because you could save hundreds or thousands of dollars through this step, you will be able to reach your down payment goals more easily.

While saving for your down payment can seem daunting, it may not take as long as you think. Each of these steps will help you to make great progress toward your goal. When you are ready to start searching for your first home, contact Elizabeth Bos for assistance.