Your goal is to purchase a home and, in doing so, you know you need the largest down payment you can. Most lenders now require some level of a down payment. This could be between three percent, if you are getting an FHA loan, up to 20 percent or more, for a conventional loan. Saving that amount of money can seem challenging, but a few tips can help you to do just that.
#1: Go to a Cash Flow System
Don't use your credit cards. Realize you spend more when you use credit, both in terms of buying more freely and in paying interest. Moving to a cash only system, where you buy what you need to only with cash on hand, can help you to save significantly.
#2: Make It Automatic
Don't trust yourself to transfer a set dollar amount from each paycheck into your down payment savings account. Make the process as automated as possible. This means setting up your bank account to make the transfer for you.
#3: Get Frugal
There's no doubt you'll need to cut back. Whether that means skipping the coffee shop or making more meals at home, realize the rewards are there. You'll save money in the long term with a larger down payment and be able to do much more than you used to do.
#4: Tuck Away Your Tax Refund
A nice way to boost your bottom line here is to put your tax refund aside if you get one. This is sometimes a nice chunk a money that is perfectly suited for a down payment addition. You may even want to up your deductions on your paychecks to ensure you are putting aside as much as possible.
#5: Sell Whatever You Can
You can add to your down payment fund by simply selling off things you don't need. That may include things like old electronics or extra clothing. Every little bit can help you to work towards achieving your goal of home ownership.
Whether you work more hours or take on a new job, building a down payment for a home is a process that can take some time. It does pay off, though. Work with a trusted mortgage specialist to ensure you are getting the best possible terms for your loan once you get to that point. You can always talk to the lender early and find out what he or she recommends for a down payment, too.
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