Does the prospect of a big
down payment make home ownership seem impossible? It’s not as out of reach as
you might think. Here are five tips to help you climb the down payment
mountain.
Every month you pay the rent,
you’re probably thinking, “I wish this money was going into my future.” For a
lot of would-be first-time home buyers, it’s the down payment which makes home
ownership seem impossible. Climbing the “down payment mountain” isn’t
impossible. Like any major challenge, it’s all a matter of breaking your big,
hairy, audacious goal down into practical steps.
Here are some tips to conquer
saving for a down payment:
Find out where
your money goes. You can’t start saving if you
don’t know where you’re spending. For a month or two, track each expenditure,
no matter how small. Get an objective picture of where you’re spending the
cash.
Get specific about
how much you need to save.Even if you’re not 100% sure
what your down payment needs to be yet, it’s good to start doing a little math
to figure out how much you need to save. Pick a dollar amount and a timeline to
hit that dollar amount. For example, a `20,00000 down payment in two years
comes to `83,000 per month. Sound unrealistic? Either scale down your home
desires to something smaller or scale up your timeline. If you can wait three
years, that monthly savings goal drops to ` 55,000/month.
Determine the big
moves you can make. If you’re in a three bedroom
apartment and can stomach the idea of scaling down to a one bedroom, how much
would you save in rent? What about going from two cars down to one? If you can
make it work, these sacrifices will have a huge impact on your savings goals.
Setup a separate
savings account. Don’t let your dream home
money mingle with your regular checking or savings account. Establish a
high-yield savings account with a credit union or money market account to
protect and build your stash. It’s important to have a separate account with a
“hands off” attitude.
Mind the risky
investment schemes. Once you have a little
momentum, you might be tempted to take some of that cash and invest it in order
to make it grow faster. Be very prudent about this, as investing in stocks,
startups, or high-yield funds can easily decimate your savings. Be
conservative.
Of course, it’s important to
know how much home you want to buy when you’re saving up for your down payment.
I’m happy to give you an idea what homes are selling for in your area. Feel
free to get in touch any time for booking your Dream Home!
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