One of the things you’ll want to do when you buy a house is make sure you have a good down payment. While there are mortgages that offer low or no down payment options, they aren’t for everyone. You may not qualify for them, and even if you do you could find that the interest rate and fees are higher. It can seem difficult to save for a down payment, but there are a number of ways to make it easier. By following these five steps, you have the chance to get your down payment accumulated faster than you might have thought, even if you’re trying to save up quite a bit of money.
1). Analyze your spending habits.
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The first step you want to take toward saving for a big down payment is to analyze where your money is currently going. If you’re spending a lot of money on things you don’t really need, you may want (and need) to make some changes. You also have to take a look at whether the money that is being spent is going for something you can’t avoid, like your rent, or something you can elect not to buy, like dinner out or a coffee on the way to work every morning. Some of your spending is going to be required, and you can’t save every dime you make. That’s not realistic. A good analysis of your spending habits, though, can help you get a good idea of what you can do in order to start saving money.
2). Cut costs where you can.
Saving for a big down payment can be a great way to buy more house and still have a reasonable mortgage. If that’s a part of your home buying plans, determining where to cut costs matters. You don’t want to cut out everything that you enjoy, though, or saving for your down payment will become frustrating. There needs to be a balance, so you can still have some fun but also see your down payment fund grow at a rate you’re happy about. Typical cost-cutting measures include things like eating dinner at home more often, making your own coffee in the morning, and packing lunches for work instead of going out to get something. People also cut their cable service or their cell phone plans down, and reduce the amount of clothing and non-essential items they buy.
3). Make sacrifices.
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Depending on how you’re spending your money currently, how much of a down payment you want to have, and how quickly you’d like to have that payment available, you may need to make some significant sacrifices. Can you use a prepaid cell phone instead of having a bill every month or cut out your cable bill and use Netflix or another streaming service? Will you be willing to eat all your meals at home in the evenings, sell your second car, or have a big yard sale with some of your unneeded items? There’s no requirement to do any of those things, and you are the only one who can decide what level of sacrifice you want to make to save for a big down payment.
4). Utilize the right kinds of  saving accounts.
Another important step to help you save up for a big down payment is to understand what kinds of accounts you’re using and make changes if necessary. For example, you might want to move your money to a checking account that offers interest, or invest in some short-term CDs. In some cases, changing or adding accounts won’t give you enough value, but there are many instances where you’ll see a benefit. It’s worth talking to your bank or other banks in the area, in order to see what they can offer in the way of accounts that might help you save faster. Some banks have debit cards that “round up” your purchase and put the difference from checking into savings, or other types of programs, that can also help you save more, almost without realizing it.
5). Reward yourself for meeting smaller goals.
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By following some simple steps, you can save more money faster, so you’ll have your down payment ready when you find a house you love. Then you don’t have to worry as much about the size of your mortgage, and you can buy a home that really suits your lifestyle. But what about rewarding yourself along the way? It’s important to acknowledge small goals, too, and rewarding yourself can help you feel better about making sacrifices to come up with your down payment. Just make sure those rewards aren’t expensive or very frequent, or you’ll be undermining what you’re trying to do. By choosing something that’s free or very inexpensive, you’ll keep on track with your goals and still get a reward.
Saving for a big down payment will take time, effort, and discipline. It can’t be done overnight, and at times it can seem frustrating and far away. Getting that money together and using it to put down on a home you really love, though, can make the entire thing well worth the work that you’ll put into it. It’s a rewarding experience, and can help you get into a house you can enjoy for a long time to come.
2 Point Highlight
Saving for a big down payment can be a great way to buy more house and still have a reasonable mortgage.
By following some simple steps, you can save more money faster, so you’ll have your down payment ready when you find a house you love.
