So you’re looking to buy a house but you need to come with the money for the down payment and how in the world are you going to come up with all this money.
- Down Payment on a House
- Interest Rates Go Lower
- 1. Open Up A Savings Account
- Two Reasons Why We Don’t Want To Do This:
- 2. Create A Budget
- 3. Check Your Interest Rate
- So this goes on both sides of the equation.
- 4. Check Your Credit Score
- 5. Use Any Windfalls To Your Advantage
Down Payment on a House
So regardless of how much you’re needing to save saving for a down payment is a major life goal and achievement.
And whether you’re talking about 20% down or you’re talking about something like 3% to 5% down.
It’s going to be a big number a big amount that you’re saving for.
Fortunately or unfortunately depending on what side of the fence you’re on, home prices pretty much around the country have been rising in recent years.
Interest Rates Go Lower
One reason is due to lowering interest rates, So you think about it as interest rates go lower, buyers can afford more house.
Because the cost to borrow money isn’t quite as high they can borrow more money and still have the same monthly payment.
That means down payments on the same percentage have gone higher because you’re buying more houses.
So it can be difficult to save for a down payment but it’s not impossible.
Let’s go and talk about five ways to help you get there:
1. Open Up A Savings Account
So you want to have a savings account that’s specifically designated for your down payment money.
You don’t want to co-mingle with your regular monthly expenses.
Two Reasons Why We Don’t Want To Do This:
- If all your money is grouped in the same account. It’s going to be easy to dip into that money.
If you just have a number in your mind that’s part of your checking account that you’re keeping track of mentally.
It’s going to be easy whenever you have something that you want to purchase just to dip into those funds every once in a while.
By setting aside that money in a separate savings account it’s going to be a lot more difficult to get to it.
“That means you’re going to have to actively go to that account and transfer into another account to use that money.”
Gonna be far less likely to touch it.
- Thing is in a traditional checking or savings account you’re earning no interest on those types of accounts.
You compare that with an online high yield savings account.
You’re getting a little bit of something now it’s not going to be great it’s probably going to be less than one percent right now but at least you’re getting something.
2. Create A Budget
So now step number two you need to have a budget.
If you’re not tracking your expenses you have no idea where your money’s going month to month.
So I’ve been budgeting for at least probably 10 years now.
And every single month I seem to find one category that I’m surprised at how much I spent in that specific category.
I try to spend maybe 200 a month on eating out and if I’m not watching it closely.
“I’ll be surprised to see that I’ve spent three-four hundred dollars just eating out in a single month”
Be Intentional About Where Your Money Is Going
It’s really about being intentional about where your money is going.
I don’t want to be spending 400 a month eating out it’s just not worth it that much.
But by budgeting, you can be intentional with where your money is going track your expenses, and then put more towards the down payment.
You’ll find unnecessary expenses that you didn’t realize you have you can cut those out and that just adds more fuel to the fire of building your budget.
3. Check Your Interest Rate
Step number three is to check your interest rate.
So this goes on both sides of the equation.
So this goes on both sides of the equation.
- Our money in our account like we talked about a little bit ago.
So your savings account if you’re in a traditional checking or savings account.
You’re probably getting next to zero percent on your interest.
You compare that with a high yield savings account and you can get a little bit of something now it’s not going to be great but at least it’s working for you.
- On the other side of the equation if you have any high-interest rate debt.
So things like credit cards possibly auto loans where you’re paying a lot of interest on those.
It’s like running a race hill, it’s going to be a detriment to your long term success but also going to make it more difficult to save for a down payment on a house.
If you do have high-interest rate credit card debt consider trying to knock that out before going for the down payment.
Pro Tip: Pay Off High interest Debt First.
If you recently bought an expensive new car that has a high-interest rate on it.
It may be worthwhile considering if you might want to sell it and buy something a little bit cheaper.
Excess money that you’re not spending can be added to your savings for your down payment.
4. Check Your Credit Score
Step number four is going to check your credit.
Now I’m not sure where you are in the home buying process right now.
But now is the time to check your credit the earlier you check your credit the more time you have to correct any issues.
It said that there are like 20 active credit reports that have some error on it according to the FTC.
Having good credit is not only going to save you money on your mortgage but also is going to make the process a whole lot easier.
The sooner you find and get any issues corrected whether they’re legitimate or not.
The more time you’re going to have to build up your credit before you have to buy the house.
5. Use Any Windfalls To Your Advantage
Step number five is going to use any windfalls to your advantage.
So whether this is a tax return, you get a bonus at work or maybe grandma sends you some birthday money.
Whatever it is I know it can be very tempting, to go out and splurge a little bit of that money treat yourself to something nice.
Try to resist that temptation if you can and focus on what your actual goal is.
Do you want the new pair of shoes or do you want to buy the house a little bit sooner?
Pro Tip: Look For Programs That Help Home Buyers.
Another thing to check out is programs that allow people to buy homes a little bit easier.
Now a lot of these are geared towards first-time home buyers.
But some of them are geared to anybody that’s buying a home.
And around the country, there are about 2300 different programs.
They either cut your interest cost or cut some expense or maybe you’re just pure grants that you can get its free money that you don’t have to pay back.
So do a little homework a little bit of research and see if you qualify for anything like this can help make your down payment a little bit easier a little bit more achievable.
That’s going to be it for this article hope you enjoyed it if you did I’d really appreciate it. Like And Share this post on social media.