Did you just groan at having to sign another year lease on a rental property? Did your landlords decide to raise the rent on you? Has the idea of buying a home become more and more appealing to you? There are many reasons to buy a home versus continuing to pay on a rental property. One of the most daunting aspects of applying for a home loan is the dreaded down-payment question. It is hard to come up with a seemingly large chunk of money, on top of having to spend so much on living expenses. It can be done though, with a cliche saying of, “tightening the old belt!” Here are a few ways to start.
A Down Payment Account
Once you have decided to start putting money aside for a downpayment, the best place for it is in its own account. This way you won’t be tempted to use it or have to continually calculate what is for down payment savings and what is not. Also if you put it in a savings account it can accrue a bit of money for you, depending on your institution’s savings plans. This is a good time to maybe research the best place to have down payment savings. Some people are savvy enough to put it in accounts that will really work for them. Do what you are comfortable with and be proactive in research. However, make sure it is in its own account.
Make Budget Adjustments and Goals
This is when the hard choices come in. How soon do you want to buy a house? If you set goals and make a new budget, the growth and sacrifices can be seen. This is the time to evaluate how much you spend on extra’s. What is extra? Well, how much do you spend on cable? Netflix? Amazon? Hulu? How often do you eat out or grab a coffee in the morning? These are simple areas to evaluate and set goals in. Figure out what is doable for you in your situation and when you can make the cuts. That’s almost, roughly, $600 in savings if you cut all those extras out. Find other places within your budget to cut back. Even if it doesn’t seem like a large amount, all the little extras will help with savings.
Make Smart Choices
Deciding to save and then saving can be two different beasts. This is where you have to make hard decisions and tough choices. There are a lot of resources available to make the most out of every budget. There are lots of websites and podcasts that can help make you good, cheaper choices, to help you obtain your goal of a downpayment. Once you have some money saved, it is a good time to get all your paperwork ready to apply for a home loan. Once you know your budget, and know your range, you will know how long it will take you to reach or your down payment goal.