Saving for down payment for your new home can be daunting but here is a step by step guide to help you start and maintain your savings account that can be used for your down payment.
Pay off debt first
The biggest single item that get in the way of people being able to purchase a home are usually debt. Credit card debt, student loans and car loans are an example of loans that can limit the amount of money you save toward your down payment of your new home.
Figure out how much you need to save
Typical down payments for homes are 20% of the purchase price. Some loans offer lower down payment options but sometimes these loans may incur mortgage insurance.
Figure out your timeframe
Saving money takes time. How much do you need to save for your down payment? Map out how much you need to save on a monthly basis and make a plan to save!
Find the best way to save
Does monthly or weekly savings work best for you? Use bank tools like auto deposits into savings accounts on a weekly or monthly basis or on pay day.
- cut the cord – cancel your TV service and opt for more economical services like Netflix or Hulu
- reduce unneeded expenses like daily coffee purchases at Starbucks
- eat out less often
- use cash to pay daily expenses to help you set a budget
Setup something that is automated
Setup an auto deposit on a monthly or weekly basis to help you save each month. Payday is another common day to automatically reserve money to your savings account.
If ever you experience a windfall, make sure to save at least a portion of the money to your savings account to help give it a boost.
Some windfalls include:
- tax refund
- bonus at your job
- other gifts
Contact a lender at FirstOak Bank to learn more about our home loan options and down payment options for your new home