Updated: Jan 5
Saving money for a down payment is often one of the most difficult parts of preparing for homeownership. A down payment is important for buyers of all ages, but first time home buyers often struggle the most. If you are trying to boost your savings before buying a home, try out some of these ways to save for a down payment.
Way to Save #1: Decrease rental costs
For most people, rent is their highest recurring monthly expense. This means that cutting rental costs on your home or apartment can make a big difference in your savings rate. If possible, talk to your landlord about lowering your rent. This will not always work, but if you have a history of being a good tenant, your landlord might cut you some slack and skip the rent increase this year.
If you can not decrease your current rent, consider moving into a smaller, cheaper place while you are saving up for your down payment. Downsizing your apartment might feel like a step backward, but this change can allow you to put more money into savings each month, meaning that you will be able to achieve your goal of homeownership even sooner.
Way to Save #2: Cut recurring monthly expenses
Many people mindlessly renew their renter's insurance, car insurance, cable, internet, and cell phone packages. These costs can slowly creep up over time, meaning that you might be spending more than necessary on these recurring monthly bills. Shop around and see if you can find a lower rate for renters and car insurance. Consider whether your family could downgrade to a cheaper cable and internet package or switch to a more affordable cell phone plan. Saving an extra $50-$100 per month on these bills might seem like a small change, but it can mean a big boost for your savings.
Way to Save #3: Sell old furniture, clothes, and games
Having a garage sale or posting your items for sale online can be a great way to come up with some extra cash. As an added bonus, this will help you declutter your home, making it easier to pack everything up when it comes time to move into your new home.
Way to Save #4: Check out the home buying programs available in your area
Many cities and states have special loans or grants that are available to first time home buyers. Make sure that you are taking advantage of any additional funds available to you when it comes time to purchase your new home.
Way to Save #5: Consider dipping into your IRA
One of the benefits of an IRA is that first time home buyers can take out up to $10,000 without paying an early withdrawal fee. If you have been diligently adding to your IRA over the years, this can be a great way to give your down payment a boost without borrowing any additional money or paying any extra fees.
In the market to buy, and want to learn more about the financing options for homebuyers in our area? Contact our team today!