Skip to main content

4 Steps To Save For A Mortgage Down Payment

Buying a home is one of the biggest investments you’ll ever make. And while a mortgage is obviously a large financial commitment, before you even get to your mortgage, you’ll be required to come up with a down payment.
Typically, lenders want buyers to contribute a down payment of 20% of the purchase price of the home. So, if a home is on the market for $500,000, most lenders want a down payment of at least $100,000. Being able to contribute the down payment shows lenders you’re financially secure and can take on the cost and commitment of a 15 or 30 year mortgage.
But if you’re like most people, you probably don’t have $100,000 at your disposal and will need to save for your down payment. Coming up with that large of a sum can be a challenge, but with the right strategy, you’ll be able to save your down payment much more quickly and easily than you might think.
Here are four tips to grow your savings account, get your down payment and get into a new home.

1. Write everything down

Before you can start padding your savings account and adding to your down payment fund, you need to get a clear idea of exactly where your money is going. For one month, write down everything you spend: everything from your monthly bills, like electricity and internet, to your variable expenses, like entertainment or eating out at restaurants. You can keep track of this manually (like in a notebook), in a spreadsheet, or through a budgeting app.
Writing down all of your expenses can be an eye-opening experience; most people underestimate the amount of money they’re spending in certain areas and having everything on paper will allow you to look at your spending habits objectively and identify areas where you can cut back and save.

2. Create a budget

Once you have all of your expenses written down, it’s time to create a budget. While some bills are unavoidable, like living expenses, you’ll definitely notice areas that will allow you to cut back. Spending $50 a month on lattes at the coffee shop? Make a commitment to brew your coffee at home and put that money in your savings. Have an expensive gym membership? Consider downgrading to a more affordable option or take advantage of free exercise options, like running in a local park. Spending a lot money on gas? Look into public transportation options.
Once you’ve identified areas to cut back, create a final budget and then stick to it. Use a budget monitoring app like Mint to help you keep track of how close you are to hitting your budget limits; the app will send you notifications when you approach your limits in each of your predetermined budgetary categories.

3. Save it before you’ll miss it

If you rely on your will to save money, you’ll likely find it challenging; it can be hard to motivate yourself to transfer money to your savings account when there are things you want to spend money on. To avoid spending more money than you mean to due to lack of willpower, save your money before you have the opportunity to miss it by setting up automatic transfers into your savings accounts.
Determine how much you want to save each month and then set up automatic transfers to ensure that amount makes it into your account. You can set up one transfer or multiple transfers, but set each to occur immediately following a payday; if you transfer the money from your checking to your savings immediately, you won’t have the opportunity to change your mind or accidentally spend more than you planned.

4. Celebrate milestones

Saving enough money to make a down payment on a home is a huge undertaking, and it’s likely to take quite a bit of time. And when it takes months or years to save, it’s easy to lose sight of your end goal and get discouraged. That’s why it’s important to celebrate savings milestones along the way to keep yourself motivated and committed to reach your goals.
Take your larger savings goal and break it down into smaller milestones, like first $1000 saved or 3 months without breaking your budget. Then, make sure to acknowledge and celebrate each milestone along the way.
Just don’t celebrate by spending more money; if you celebrate hitting your savings goals by breaking your savings commitment, you’ll do more harm than good. Instead, look for free or inexpensive ways to celebrate, like having a picnic with your family in the park.
With these four tips, you’ll be well on your way to getting the 20% you need to buy your next home. All you need to do is commit to your goal, stick to your budget and keep building your savings.
Today's Home Realty
Mobile - 832-418-0670

9119 Hwy 6 S #230-116, Missouri City, TX 77459


Popular posts from this blog

Home Buyers and Seller beware - WIRE TRANSFER FRAUD

If you are in the process of buying or selling a home please BEWARE: Online banking fraud is on the rise. If you receive an email for a title company or your real estate agent containing WIRE TRANSFER INSTRUCTIONS call your agent or escrow officer immediately to verify the information prior to sending funds. Here’s how the scam goes down. You’re about to settle on a home. You get an e-mail from your real estate agent or from the title company, requesting funds to be wired to an account for settlement. The e-mail states that there is a last-minute change in wiring instructions. You dutifuly wire the money using the new instructions. Then, the call comes from the title company the day before settlement, asking why you have not sent your funds for settlement. This is the moment you learn that you have sent hundreds of thousands of dollars to a thief. This scheme is not new. But a recent resurgence of wire fraud in the real estate industry, and the increase in its sophistication, prompted the N…

Rental Fraud Alert - Texas - Luz Astacio, 512-222-6876

Rental Fraud Alert: This fraud occurred in Cypress Texas but I found others outside if Texas that have been contacted by these same scammers!
I know I have brought this up before but it's worth mentioning again. There are many rental scammers out there and people fall for it every day.
I had a former client rent a home on their own. The offer they received was too good to be true (that's always a sign). They paid their security deposit and 1st months rent. They were emailed a contract (not a Texas lease) which everyone signed. It all seemed legit. They were given the combination to a lockbox that was on the door that contains the keys. They moved in and shortly after were asked for $1000 to pay property taxes (red flag!).They sent the funds and then they called me.
Unfortunately it took me 5 minutes to realize that they had been scammed. The home is actively on the market for $2550 (their rent was $1200) and the owners listed on the contract provided are not the owners of the ho…

4 Tips For Buying A Home From A Distance

Chances are, if you’re looking for a new home, you’re ready for a change of scenery. And while that might mean just a new property or a new neighborhood, for many potential homebuyers, that often means a new city. And if you’re considering buying property in a city other than the one where you currently reside, you probably have a lot of questions about the process. Will you have to fly to your new city every weekend to look at properties? Will you miss out on hot properties? Is it even possible to buy without physically being in your city? Buying a home from a distance certainly presents its own set of unique challenges, but by no means is it impossible. Here are four tips for buying a home from a distance to make the process easier, faster, and less stressful for you and your family: 1. Gather information When you’re buying property in an unfamiliar city, the first thing you need to do is educate yourself. Gathering information on the city, the neighborhoods, the cost of living, an…