There is only one thing standing between you and owning a new home. Unfortunately, that one thing is the most important: the down payment. While down payments for homes fluctuate depending on a number of things that are taken into consideration, you should plan to have anywhere from ten to twenty percent of the overall cost of the house saved up before you begin looking. Those numbers may intimate you, but you would be surprised by how much money you can save just by following the simple steps listed below.
Set A Goal
Setting a financial goal may seem easy enough, however, it goes much deeper than simply saying you want to save a certain amount of money. For example, instead of saying that you want to save a ballpark figure before you start looking for a home, you need to have hard numbers. Sit down and go over your finances to determine exactly how much you can afford for a monthly mortgage payment. Make the goal plan as detailed as possible. The more detailed your plan is, the easy it will be to execute it.
Analyze Your Spending
Sit down and go over your last three bank account statements. Where is the majority of your money going? Looking back at the past three months of your spending habits will help you to pinpoint what you spend your money on and which areas you can afford to cut back on. If you are spending a good amount of your paycheck on fast food, you know that you will have to cut that out of your budget. You may be uncomfortable for a little while without having your perks in life, but it will be well worth it when you get the keys to your new home.
Get Rid Of Cable
That statement may have just hurt you a little, but no one really needs to watch television. If you can't cut it out completely, see if you can shrink it a bit. Instead of having every channel available, call your provider and see if there are any packages that offer only the channels that you watch. Keep in mind that there is nothing on television nowadays that you can't stream online. Having a monthly streaming service is much cheaper than having cable.
Put Your Refund Away
Are you expecting a tax return next year? Instead of spending it as fast as you receive it, place it in a savings account. You will have to exert self-control, but it's important to put it towards the down payment goal that you've made. Consider putting your tax return, and other money that you plan on saving, in a high-yield savings account. A high-yield savings account offers a higher interest rate for your savings than a standard savings account. Don't put your savings in a bank account. Putting the money in your banking account won't garner any interest and it may tempt you into spending it.
Saving for a down payment for your own house may seem overwhelming, but it's really not. All you have to do is follow the steps listed above, as hard as they may seem, and you will finally have that home you've been dreaming of for years. Once you're ready, contact a realtor in your area to look at homes for sale.