Saving for a down payment--typically between 5 to 20 percent of the home's value--is one of the biggest challenges for aspiring homebuyers. The American Bankers Association Foundation highlights the following six tips to help consumers cut costs and start saving:
Develop a budget and timeline.
Start by determining how much you'll need for a down payment. Create a budget and calculate how much you can realistically save monthly. That will help you gauge when you'll be ready to transition from renter to homeowner.
Establish a separate savings account.
Set up a separate savings account exclusively for your down payment and make your monthly contributions automatic. By keeping this money separate, you'll be less likely to tap into it when you're tight on cash. If you receive a tax refund, consider putting it into this account.
Shop around to reduce major monthly expenses.
It's a good idea to check rates for your car insurance, renter's insurance, health insurance, cable, internet, and cell phone plan. There may be deals or promotions available that allow you to save by adjusting your contracts.
Monitor your spending.
With online banking, keeping an eye on your spending is easier than ever. Track where most of your discretionary income is going. Identify areas where you could cut back like nice meals out, vacations, etc.
Look into state and local home-buying programs.
Many states, counties, and local governments operate programs for first-time homebuyers. Some programs offer housing discounts, while others provide down payment loans or grants.
Celebrate short term wins.
Saving enough for a down payment can be daunting. To avoid getting discouraged, break it up into smaller goals and reward yourself when you reach each one. If you need to save $30,000 total, consider treating yourself to a nice meal every $5,000 saved to help stay motivated throughout the process.
Have questions? Contact Four Corners Community Bank's
mortgage department toll free at 855.547.3222 or learn more here.
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