If you have decided that now is the right time in your life for you to purchase a home, it's important to make sure you've saved enough for a down payment. Use these tips to help set your mind to the task and create a solid plan for how to get there.
Set Your Savings Goal
If you know you're ready to buy a home, your first step may be to get pre-approval for a mortgage. This will let you know how much of a mortgage you are pre-approved for, giving you a realistic homebuying budget. From there, you can determine what percentage of the home's value you'd like to pay upfront as a downpayment. For example, if you're looking to buy a $300,000 home and want to put 10% down, your savings goal should be $30,000 to start.
Focus on Your Budget
Once you have set a savings goal, you can start to work towards it. Instead of putting whatever's leftover at the end of the month into your savings account, make your savings the first priority. Pay your house fund first before spending on anything else that's not a necessary expense. Saving for a home is a lofty goal, and you need to be aggressive and dedicated in your savings strategy.
Automate Your Savings
Saving for a downpayment can take some time. An easy way to stay focused on your goal is to make it automatic. If you automatically put your savings for the month in a separate account, then you do not run the risk of spending the money and getting off track. To do this, you can create a separate savings account or checking account and set up an automatic transfer of funds every time you get paid. If you think of it as paying yourself first, then you will likely not even miss the money. Transferring it as soon as it hits your bank account makes it easier to pretend it was never there and to continue saving.
Look For Assistance Programs
There are local and federal programs available to qualifying first-time homebuyers that help cover the downpayment and closing costs. Most programs have strict requirements, including income caps. If you think you may qualify, some organizations to check with include:
- The Federal Housing Administration
- The US Department of Agriculture Rural Housing Service
- The Veterans Administration
Buying a home is an exciting adventure, especially when its your first. Be patient and diligent when saving for a downpayment. It's a good idea to talk to a financial advisor about your potential home purchase to make sure you're not spending too much and to plan ahead for the downpayment and purchase process itself, as well as future home-related expenses to include in your financial plan. Escient Financial is always here to help, so go ahead and...
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