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Whether you’re a first-time buyer or someone looking to move into a new home, saving up for a down payment is often a top priority. While for some it can seem a bit daunting, it doesn’t have to be. Here are a few ways future buyers can simplify the process:
Know Your Options
While many potential buyers use the 20% estimate for a down payment, that isn’t always their only option. Do some research or contact a loan officer to learn more about the options available to you. You might qualify for certain programs that would allow you to put down a much smaller down payment.
Revisit Your Budget
The first thing potential buyers should do when wanting to accelerate their down payment savings process is to consult their budget. What are your current monthly expenses? And which of those are true necessities? What are your current spending habits, and where might you be able to cut back? Saving doesn’t need to feel restrictive. It’s not about never spending any money in the process. It’s about getting excited about your goal and doing what it takes to get there. While swapping that morning drive-through coffee for one made at home might not feel exciting at first, as you watch your savings grow as a result of your updated budget, you’ll see the rewards.
Consider a Side Hustle
Your budget needs to be realistic. If you’ve assessed your budget and determined that you don’t have as much left over as you’d like for savings, a side hustle might be a great option. There are so many online, work-from-home type positions people can take up on a part-time basis. You could even start your own small business. Looking into creating an additional income stream and funneling that money directly into savings can dramatically accelerate your saving process.
Make a Plan
If you know your savings goal, it’s important to know what the path to achievement looks like. How much do you plan to save a month? And at that rate, how long will it take you to reach your goal? Where should you be six months from now? How about a year from now? Giving yourself a clear plan to follow can help future buyers to stay on track.
Automate Your Savings
One of the best tips for those wanting to commit to saving for a down payment is to automate their savings plan. If you want to save $200 a month from your paycheck, consider adjusting a portion of your direct deposit to go straight to savings. If that’s not an option, setting up a monthly transfer from your checking to savings can achieve the same result. Automating the process ensures that the money makes it in each month. If you have extra money to throw into savings at the end of the month, that’s great, but at least you know you’ve hit your minimum no matter what.
Are you in the process of saving for a down payment? What are your strategies? Have you been through this process already? What tips would you share with future buyers? I’d love to hear your thoughts!