Five Ways To Save for a Down Payment
In the United States in 2019, 5.25 million homes were sold. It’s no secret that the real estate industry is always busy. Many individuals, partners, and families are looking to become a homeowner in their near future. But, a daunting question for many, is how to save enough money for a down payment.
The median wage for workers in the United States in the first quarter of 2019 was $47,060 per year. While wages vary drastically depending on the area you live, many people are on a tight budget, and saving up for a house can be daunting. You might be wondering how to pinch pennies and stash away money for your average 20% down. Everyone can find a plan that works best for them, but here are our five ways to help you reach your down payment goals.
Have dedicated savings account for your down payment fund. Start to transfer a set amount to this savings account with every paycheck. You also might want to think about having your savings account at a different bank or credit union, so it is not as accessible to tempt you. Having your savings in an area that is not directly tied to your everyday account makes it more difficult to pull that money out for more frivolous expenses. It goes with the common saying, “Out of sight, out of mind”.
Lowering your monthly expenses. It is surprising how much more one can spend when going to the grocery store without a set grocery list. Plan out your monthly finances and tighten up your budget. Make a meal plan, a spending goal, and list out what you need, so you aren’t making unnecessary purchases. You could also cut out monthly subscriptions while you are working towards your down payment goals. There are a handful of great budgeting tools, that come at little to no cost. These tools can assist you in budgeting your finances and reaching your down payment goals.
Increase your income. A second job is always an option, but not always feasible. There are a handful of ways to increase your monthly income without necessarily getting a second job. Here are some ideas:
• Dog walking or pet sitting
• Starting a side hustle after work
• Selling items at a local farmers market or crafts fair
Spring cleaning is just around the corner. Go through your home and sell unwanted items on yard sale sites or hold a garage sale. Selling unwanted items is a great way to find the money you didn’t know you had. It also will help you downsize, so when it is time to purchase your new home, you won’t have as many unwanted items to move!
Skipping vacations. We saved the worst for last. It is hard to swallow not going on the trip to Disney Land or that cruise abroad. However, these vacations cost a significant amount of money in the end, that money could be used for a down payment on your new home. While not everyone goes on lavish vacations, it’s good to consider if you are making big spending purchases, what the money is going towards, and if it is worth skipping for a bit to increase your savings.
Now that you are equipped with a few saving options, take a look at your spending, write down your goals, and stick to them. You will be on your way to saving for your down payment in no time. There are many different options for loans and down payment options depending on if you are a first time home buyer and more. If you have any questions or want to schedule a meeting with the Lemmon Team to learn more, feel free to contact us. We are always here to make your experience an enjoyable one! To learn more about buying or selling a house, read our other blogs.