Three Tips To Save For A Down Payment

If you're ready to meet your financial goals while still being able to enjoy life, we have three easy steps to help you save for a down payment on a home.A good rule of thumb is to have ten or twenty percent saved as a down payment on a property.  This can help you get the mortgage you want and secure a better interest rate.  It can also make your offer look more attractive to sellers, and help you avoid private mortgage insurance (PMI) costs.  The problem is often that saving for the down payment can just feel like an impossible goal!Don't panic.  Recognize that you have several options in saving up the cash needed to buy a home.  Your home-buying goal is just one part of your life, which means missing every happy hour or social event with friends to save every penny may not be the best idea. Instead, take a look at small actions that carry a bigger impact.  You may consider saving on your daily coffee shop habit by brewing at home instead.  Think of your down payment savings as a marathon, not a sprint.  This will help you word towards your goal while still enjoying the life you're living.

1. Cut Back Expenses

The first place to start while looking to save for a down payment is often to cut back on expenses. Eliminating expenses can allow you to move that money over into your savings.  Look at the costs in your budget and sort out things you know you would not miss- like that daily coffee shop habit- and cut them out.  It might not account for much, but that's OK.  You don't need to cancel your necessities like your electricity, but you likely don't need that $200 restaurant dinner this week.Next, take a look at what you aren't willing to give up.  Hulu or Netflix might be an absolute must-have for you, and that's okay!  Call your providers and explain that you can no longer afford your current rate.  See what options they have available for you.  You might be surprised to find rate reductions and discounts are often available.If that doesn't work, begin shopping around for different providers to find rates that better fit your budget.  You may consider switching cellphone carriers or insurance companies.  A new service provider may offer introductory rates, discounts or incentives for someone looking to leave their competitor and become a new customer.  Lots to consider!

2. Match Your Savings To Spending

This savings tip can help you inch closer towards your goal while also helping you spend more mindfully.  Each time you go shopping or spend money on something you want, take a look at the total you spent.  Transfer the same amount you spent from you checking into your savings.This trick forces you to use and think about your money in a whole new way.  It will help you prioritize your spending in a new way.

3. Consider Your Timeline

Saving for a down payment in one year is a lot harder than saving for a down payment over three years.  If you want to buy a home but aren't ready to cut out your social life or fun spending, consider changing your timeline.  There are no rules indicating you must buy a home right now.  Something you do want to consider, however, is interest rates are expected to begin climbing in the coming year.  You may not want to waste too much time.