If you are thinking of buying a home, you may be searching for ways you can best save for a down payment. It may seem difficult, between all your bills, student loans and other payments you have to make on a monthly basis.
But, don’t worry! There are many things you can do that can help you save up money for a down payment.
Here are 6 ways that can help you start saving for a down payment for your dream home.
Temporarily Stop Paying 401K
Before you start thinking about retirement, focus on your short-term goal of saving for a house. Although you may be missing out on contributions from your employer, you’ll be able to make up for that through the equity you gain in your new home. Plus, you can start contributing again as soon as you close on your home.
Ask for Gifted Funds
If you feel comfortable asking for gift funds from family members or friends, it can help you get the rest of the money you need for a down payment. If you have a graduation, wedding or some other event coming up, you can ask for money that way too.
Increase Credit Score
Your credit score is a huge factor when it comes to qualifying for a lower down payment. If your credit score is not up to par, you may have to make a larger down payment. It’s important to make sure your credit is in good standing to avoid paying more fees and interest rates than necessary. The good part is, you can increase your credit score while saving for a house.
Lower Your Home Budget
Maybe you have looked at homes on Zillow and found a few that you are interested in. The price might be higher than what you can afford. It’s important to realize that there is nothing wrong with lowering your budget to fit your needs, especially for a first-time homebuyer.
You may only spend a few years there anyway, and you can always build up your credit and create a 5 year plan so you can afford a newly upgraded home in the future.
Create a Budget
Budgeting is an important factor when trying to save money. You could create an excel sheet or sign up for an app like Mint. There are many other budgeting tools out there. Do some research and pick the one that will work best for you. Create a goal and what type of budget you will need to save the money you need for a down payment.
Cut Some Expenses
Go through your bank statements and cancel any subscriptions you have that you may not be using as much anymore. You could be paying for Amazon Prime, but not getting your money’s worth from it. This tactic is an easy way to save a few extra bucks each month.
Here are some expenses you can cut out:
- Take a break from the gym
- Save eating out for special occasions
- Trim your clothing budget
- Buy generic brands at the grocery store