Homeownership brings many benefits. Once you’ve decided this has become a goal, you should immediately start saving towards the down payment. Most people take years to save up enough money for a substantial down payment. Remember, the more you’ve saved, the lower your monthly payment will be for the duration of your mortgage. Let’s review five money saving tips for preserving funds for your down payment:
1. Assign a percentage of your paycheck to be directly deposited into a separate savings account. Make automation your friend and have that dollar amount automatically deducted from your paycheck. It hurts a little less when you’re not seeing the money “disappear”. Hands off those savings. Consider it money that’s already spent. It can get quite tempting to dip into it now and then. Don’t do it! Your monthly mortgage note will be smaller, and you’ll thank yourself later.
2. Save all raises and bonuses: All extra, new, or unexpected income should immediately go into that savings account for your down payment.
3. Save your income & state tax refunds and all monetary gifts: Cash gifts, inheritances, casino winnings, and tax refunds should all be immediately deposited into your savings account to help save for that down payment.
4. Get a second, part-time job: Retail and food establishments are constantly looking for part-time help. If you’d prefer something a little less obligatory: tutoring, offering music lessons, and accountability coach services are all opportunities you can do from home.
5. “Lost” money: Have you ever searched for your name with the Treasury Department? You could have money sitting in an old bank account, some old investment return lurking around, or an apartment deposit refund just waiting to be found. Check with the National Association of Unclaimed Property Administrators, as well as state treasury departments of any state you’ve resided, or the national treasury department. You may just find the funds for your down payment are already waiting for you!
While these are just a few suggestions, we do want to recommend that you avoid borrowing from your retirement savings or your relatives. You’ll be acquiring some debt with your mortgage. The last thing you’ll want to worry about is paying back a relative or an additional loan to your retirement savings.
Buying a home can be a long process. Be patient and persistent. Once you’ve acquired the keys and you’re sleeping in a home that is yours, all the hard work will pay off. Anything worth having is worth working towards! Keep your eye on your goal! Before you know it, you’ll be signing those closing documents and receiving your keys!