One of the main reasons people may not try to purchase a home is because they think they don’t have the funds for a downpayment. However, it is a possibility to save for a downpayment while renting a home, or living at home with parents! There are many ways to save!
Once you have a plan to save for a downpayment, then the home buyer can begin to think about purchasing a home! One of the very first steps is to meet with a mortgage professional so they can help you determine the price point of a home to purchase and the number of funds required for a downpayment.
Below are tips to help you plan to achieve the goal of saving money! Once a home buyer has the downpayment saved, then the reality of homeownership will be closer to becoming reality. This process will take a time, so patience will be needed in order to achieve that goal. This timeline can be established once a budget is set and income and expenses have been considered.
Establish and Live Within Your Budget
Keeping track of monthly expenses is a must! If you are not keeping track of monthly expenses then there is no time like the present! You will want to know the amount of money you are spending each month on everything. There are programs such as Quicken that you can use to keep track of expenses or you can even use Excel or Numbers if you are a Mac person.
Once you have established a budget and you are able to stick to it, you will able to monitor your monthly income and the number of expenses. Additionally, you will be able to see where money can be saved.
Pay Off Debt Including Credit Card Debt
One of the first and most important steps is to pay off your debt including student loans and credit card debt. Once one of the credit cards or loan has been paid off, then take that same amount you were paying on that debt and apply it to the next debt in order to reduce the debt. You will be avoiding paying un-necessary interest and paying down the debt even quicker.
Don’t Make Any Large Purchases
Keep in mind, you are saving for a down payment so avoid making any large purchases such as a vehicle. Remember when purchasing a vehicle, their financing institution will run your credit which can negatively impact your credit score. Additionally, the additional funds going out towards a car payment can impact the debt to income ratio and can impact what you can afford to purchase.
Sell Items No Longer Needed
It is easy to accumulate a lot of stuff whether it be kitchen items, small appliances that are not often used, clothes and more. If you have an excessive amount of clothes, then there are many places to be able to sell them and at least get a partial return on your investment.
There are websites such as eBay where you can sell just about anything including artwork, electronics, collectibles and often times some collectibles can be valuable. Other items to consider selling might be flatware or china sets that may be discontinued and have more value.
Clothing can also be sold but it has to be in decent condition, and not completely out of style. Look at websites such as Poshmark, where you can take a photo of the item you want to sell and then the money gets deposited in your account.
Electronics can also have value, and if your children have outgrown a particular item, consider selling it and putting the proceeds into an account. Make a decision that once you deposit money into that account, it will only be used for your downpayment.Create your budget to help save money for a downpayment!Click To Tweet
Avoid Un-Necessary Expenditures
After your budget has been established, expenses can be monitored. For example, if you are spending money on coffee every morning, this can be $4 to $5 a day. This expense alone can add up to approximately $1800/year. Un-necessary trips to fast food and buying soda is not only unhealthy but are expensive. When you are making purchases at a grocery store, consider what you are purchasing and where you are shopping too, as some stores are more expensive than others.
Following these steps will allow you to reduce your debt and have savings for a downpayment for the purchase of a home. This is also a lifestyle that you may want to adapt to live within your means and save for other important purchases. Homeownership also can require maintenance so it is important to have some savings in the bank is important.
— Sharon Paxson (@SharonPaxson) July 5, 2018
Find Other Valuable Resources for “5 Ways to Save Money for a Downpayment on a Home” from Real Estate Professionals Across the Country. Please check out the articles below, and please share across Social Media if you enjoyed the articles.
Mortgage Mistakes to Avoid When Buying a Home via Bill Gassett, Maximum Real Estate Exposure
1st Time Home Buying Tips via Paul Sian, Cincinnati and Northern Kentucky Real Estate
No Money Down Mortgage via Luke Skar, Inlanta Mortgage
How to Save for a Downpayment via Michelle Gibson, Wellington Home Team
5 Guidelines for Homebuyers Using Gift Funds for a Downpayment via Anita Clark, Selling Warner Robbins
About the Author
The above real estate article “5 Ways to Save Money for a Downpayment on a Home” was written by Sharon Paxson of Newport Beach Real Estate. With experience since 2005 representing buyers, sellers, and landlords with their real estate transactions, we welcome the opportunity to share our knowledge and expertise and guide you through the home buying or selling process.
We service the following Orange County CA areas: Corona del Mar, Huntington Beach, Laguna Beach, Newport Beach, Newport Coast, Orange, Santa Ana, Sunset Beach, Tustin and more! If you are considering selling your home, we welcome the opportunity to work with you and list your home with a top Newport Beach CA Realtor.