For many potential homebuyers, the largest perceived hurdle is coming up with an adequate down payment. Spending hard-earned money on a down payment is one of the best financial decisions you can make. I know many people don’t often think of their residence as an investment, but it is. The difficulty, of course, lies in saving enough money for that investment.
Here are some points to help you start thinking about ways you can save your money:
1. Set a target goal and talk to a mortgage professional. Find out what you’ll be able to afford when the time comes.
2. Assess your spending habits. Look at the last three months of your bank statements and/or receipts and figure out where you’re spending your dollars. To save your money, you first need to discover where it’s going.
3. Assess how much you’re spending on TV and internet. Perhaps you’ll decide that’s an area where you’ll make sacrifices.
4. Drop your gym membership. If you’re a faithful gym-goer, then this point isn’t for you. This one is directed at those who have memberships but seldom take advantage of them.
5. Sell items. Do you just have a ton of stuff? If you’re being brutally honest, how much of it could you eliminate? Maybe it’s time to unload some of it and get some money back in the process.
6. Downsize where you’re living. If you won’t be buying a home for another year or so, evaluate where you currently live. Maybe there is a less expensive temporary housing option for you. Don’t throw away more money in rent than necessary.
7. Get a second job. Getting a second job may be the quickest, simplest way to earn extra money. You don’t have to do it forever—just leading up to the house purchase.
8. Open a high-yield savings account. These aren’t something you can get by walking into your local bank branch. You’ll need to investigate online where you can open up one of these accounts to earn a little bit more than your average savings account.
9. Get a cash rewards credit card. Obviously, you want to be careful how you use your card, but if you get cash-back rewards, it can prove beneficial. That being said, don’t activate a card if you’re only a couple of months away from buying a home, as it will impact your credit score. If you’re a year or more away from your purchase, this could be a great option.
10. Save your tax refund. It’s that time of year again to enjoy a nice refund, but don’t be persuaded to spend that money right away. Put it into savings toward your home.
As always, if you have any questions about the home buying process, please reach out to me. I’m happy to have a more in-depth conversation and work with you to achieve your real estate goals.
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