Saving tens of thousands of dollars for a down payment on a home can be daunting. While it may seem like an unattainable goal at first, it’s possible with the right amount of discipline.
Here are five tips that will get you well on your way to saving for your new home:
- Have a Budget & Timeline
Know where your money is going. When creating a budget, look at your overall spending each month. Then look at how much you’re spending on extras like dining out, shopping, and entertainment. Distinguishing between what you want and what you need may help you cut back on careless spending. - Establish a Separate Savings Account
Open a separate savings account strictly for your down payment and set up automatic monthly contributions. By keeping this money separate, you’ll be less likely to tap into it when you’re tight on cash. Consider opening an account at your existing bank so you can readily transfer extra cash from your checking account to your savings. - Reduce Monthly Expenses
Shop around. Check rates for your car insurance, renter’s insurance, internet, or cell phone plan. There may be deals or promotions available that will save you hundreds of dollars just by adjusting your contracts. - Research Home Buying Programs
There are many local and national programs for qualified first time homebuyers. Some programs offer housing discounts, while others provide affordable rates for down payment loans or grants. Check out New Hampshire Housing for a list of current mortgage programs. - Celebrate Savings Milestones
Adjusting your spending habits to save for a down payment can be challenging. To avoid getting discouraged, break up your goal into milestones and celebrate when you reach each one. For example, consider treating yourself to a nice meal every $5,000 saved to help you stay motivated throughout the process.
It’s recommended that homebuyers secure a 20% down payment, however, according to a National Association of Realtors survey, the majority of first time homebuyers put 7% or less down on a home. Keep in mind, the more money you put down upfront, the lower your monthly mortgage payments will be in the long run.
For assistance throughout the home buying journey, give the Merrimack a call at 603.225.2793 or contact our Home Lending Team for expert advice on making the best financial decisions, based on your needs. That’s Merrimack Style!
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