Saving for a Down Payment?
Easy Ways to Save for a Down Payment
With rising rental costs and the amount of student debt at an all-time high, it's no surprise that many potential buyers think they are unable to save up for a down payment. If you've found yourself in this boat, don't lose hope. With the help of technology and a little foresight, you can save for that down payment -- and probably sooner than you think.
First off, many buyers think that they need to have a 20 percent down payment and this simply is not true! If you are looking at a $250,000 property, that would mean you’d need $50,000! This is simply not possible for a lot of buyers, which is why there are MANY loan options that offer lower down payment options and make homeownership way more attainable. One example of a loan option with a lower down payment is an FHA loan. An FHA loan only requires 3.5% down, bringing that down payment from $50,000 to $8,750. Now doesn’t that seem a little less daunting? (Check out our past blog, 5 Mortgage Options for First-Time Home Buyers for more examples!)
Here's how you can start saving today:
Set up automatic deposits. Enable automatic deposits into your savings account. Schedule them right after paydays, when you know you'll have the cash available. If you can't automate your deposits, set a reminder to transfer money every two weeks. You could also use an app like Qapital to schedule automatic savings deposits. Going back to our previous example on that $250,000 house, if you are paid bi-weekly and put about $340 away every pay day, you’d have your $8,750 payment in less than a year!
Try a round-off app. What if you could round off every purchase you make to the nearest dollar and then put that extra cash to good use? Apps like Acorns, Qaptial, and Clarity Money round off your transactions and either invest your money or it to a savings account.
Cut down on spending. Find an area of spending that you can afford to cut back on -- maybe eating out or grabbing to-go coffees. Each month, tally up your saved funds and add them directly to your savings account. You'll be surprised at the impact.
Clean house. Do a little spring-cleaning, and declutter those closets, drawers and shelves. Sell anything you don't want on Facebook, Craigslist or a consignment app. It may only be $20 to $50 at a time, but when added to an interest-paying savings account, it'll make a big difference.
Remember, you don't need the mythical 20 percent down payment ready and available to buy a home. In fact, thanks to low down payment loan options and a plethora of down payment assistance programs, homeownership is more attainable than ever.