Buying a house is one of the biggest financial decisions you will make in your lifetime. But it can also be one of the most secure financial investments for your future. Perhaps the largest hurdle to home ownership is saving enough money for a down payment, which is typically 10-20% of the purchase price. It may seem impossible to save that amount, but with some planning and preparation, you will soon be ready to start the home buying process.
SET A SAVINGS GOAL
Determine how much you want to spend on a home and what type of loan you will need. Then establish a timeline for yourself. How long can you save before you need to make the purchase? Once you have this goal in mind, you should do a deeper dive into your finances.
CREATE A MONTHLY BUDGET
Take a hard look at your income and expenses to determine how much you can realistically save each month. Find areas where you can cut back on expenses, such as eating out or subscription services. Use a budgeting tool to help you track your expenses to see exactly where your money is going each month.
OPEN A DEDICATED SAVINGS ACCOUNT
Have a dedicated savings account for your down payment fund. This will help you monitor your progress and avoid spending your money on other things. Look for a savings account with a higher interest rate so your money will grow faster. Also consider setting up automatic transfers from your checking account to your savings account every month.
FIND WAYS TO SAVE ON HOUSING EXPENSES
Look for ways to save on housing expenses. Rent a smaller apartment, live with roommates, or move into a less expensive area. Reducing monthly housing expenses during your savings period frees up more money for your down payment.
USE GIFT FUNDS OR TAX REFUNDS
Consider applying gift funds from family or friends to your down payment. Utilize people’s generosity when building your future. Tax refunds should also be applied toward your dream home while in the designated savings period.
Saving for a down payment requires discipline, patience, and a solid plan. By following these steps, you can achieve your homeownership goal more quickly. When you are ready to purchase your home, please contact Lisle Savings Bank to discuss our Mortgage Products. We are here to help!