Keys to Saving a Down Payment for a Home

KEYS TO SAVING A DOWN PAYMENT FOR A HOME

Buying a home, especially a first home, can be a really big deal. Often times it includes little money, big banks and lots of documentation. But, before you even start the process you have to have enough money in the piggy bank to take to the bank. So, how do you do it? How is it possible to save 5%, 10% or even 20% of a mortgage without going insane?

The first key is to determine how much money you feel that you will need to buy. It’s somewhat of a mystery until you meet with a lender, but there are costs involved in purchasing that you can be prepared for even before your process begins…. The key is to know what the costs might be.

1. Earnest Money. That’s the money that you write toward your purchase at the time of writing an offer.
2. Home Inspection Fees. Always recommended home inspections help to identify and take care of issues in a home before solidifying the sale.
3. Appraisal Fees. This is a requirement for any home that carries a mortgage and justifies that value that you are paying for a home.

4. Home Insurance. Many banks require a year’s premium paid in advance. It’s good to plan on it early and have it in the account. These amounts will vary greatly on company, needs, size of home and more.
5. Misc. Fees. Often in home purchasing there are fees that are unexpected. A little in the bank ahead of time will go a long ways in a smooth process.

All in all… if you are planning on a purchase of $100,000 with a 5% down payment you know that you will need $5000 in the bank before you even start. So how do you get there? You work HARD for your money and it already barely covers your expenses. Is it possible to buy or should you just give up?

DON’T GIVE UP! There is a light at the end of the tunnel. You just need to know how to get there. Here are a few tips…. And ideas… to make it possible.

1. Start a savings account just for your purchase. Putting money away in a savings account that won’t be touched until purchase is a great way to start. It doesn’t take a lot to start a savings account and really it’s just adding to it when you can that will help it grow.
2. Auto deposits in savings every month or paycheck. If you have a hard time just putting money aside… make it an auto deposit. Maybe even write yourself an invoice for the money if it helps to justify the expense. It could be as little as $5 or as big as you can afford.
3. A piggy bank or giant jar. It’s amazing how quickly you can save money with a place to put all your change. With the whole family working at it… those pennies can make a big difference. When the jar gets full add it to your savings account.

4. A dollar a day…. Do you spend money on little things that you’d be willing to sacrifice for awhile? Coffees, drinks, candy bars? They last but a moment on the tongue, but when put to good use can go a long ways in your savings account.

5. Give up something big for something bigger. Maybe you want to see a giant leap toward your savings. How far will you go? Giving up cable for a few months? Giving up date night for nights in? Are there non-essentials that you could give up for a short time that would add up in a big way? Is it worth the effort to have your own home?
6. Sell those toys. Simply cleaning ‘house’ and having a sale… or selling a big toy (snowmobiles, boats, etc) can create enough revenue that you could get into your own home quite quickly.

7. Find a second job or secondary income for a temporary reasoning. If things are really too tight to put anything away…. Would you consider secondary income for a short time with a goal in mind? I’m not talking forever kind of work… just enough to help you realize a dream.
8. Utilize those tax refunds. Are you fortunate enough to receive a tax refund in April? What a great way to add to the possibilities!

When you add them all together it’ll be amazing how quickly a dream can become a reality. The biggest key to ask yourself is how much you want it. What are you willing to do to get it? Hard work, determination and a plan are the biggest keys. Finding the ways that are possible for you to save realistically… and then doing it are the best ways to save!

For more information on the home buying process and the keys to making it possible…. Just contact me... I’d be happy to help you through the process.