When looking to purchase a home, there are a lot of things to keep in mind and plenty of expenses you cannot overlook. One of them is the down payment – an up-front payment that is usually necessary when buying a home.
While there are instances where the down payment is not required (zero down payment), it’s recommended to actually make one as that covers a percentage of the overall purchase price. Now, the down payment can vary and it typically ranges from 5 to 20 percent of the total price.
This portion of the price is usually something that comes straight from your pocket, which is why you need to start preparing for this on time. To help you out, here are five ways of saving money for a down payment which you can begin implementing today.
Lower Your Expenses for a While
When saving for any kind of a bigger purchase, sometimes it’s necessary to lower your expenses. Getting enough money for a down payment is no different. So, start by reviewing your weekly, monthly and yearly budget. Calculate how much you can afford to save every month.
See whether there are unnecessary expenses which are draining your wallet. For instance, go through all your subscriptions. Are you paying for some magazines on a monthly basis even though you don’t really need them?
Did you get the premium package on Netflix when just the standard one is enough? Are you signed up for any other streaming services as well
Moreover, you probably don’t need that new dress or that new pair of shoes right now – put the money aside for the down payment.
Also, think about sacrificing your vacations for a while in order to save up. Reconsider what you can do without and cut those costs.
Start Planning On Time
In order to save enough money, you first need to be aware of the sum you need as well as the time frame in which you must acquire it. This is why it’s important to start planning on time.
If you have no savings, you can hardly expect to purchase a home in a week. Saving this amount of money can take a while, especially if you plan on paying 20 or more percent straight away.
Unfortunately, the previous point where we talked about living more frugally is sometimes just not enough if you have to act fast to get the house of your dreams.
In case you have to put down a smaller up-front payment, you’ll probably be faced with a bigger loan. That is why you should start browsing for loans with the lowest interest rates and figuring out which one will be the best deal for you, in the long term.
Get a Side Hustle Going
In case you feel like your job doesn’t pay well enough and you have some free time on your hands, you can look into getting a second job. Getting a side hustle is not uncommon these days as many people always need more money. Plus, if you find the right job, it doesn’t have to take up too much of your free time.
Luckily, there are plenty of options to choose from. For example, you can start driving for Lyft. Alternatively, if you have good writing skills, why not try your hand at copywriting? You can also start working in the retail or hospitality industry part-time if that suits you more.
Cash in on Some of Your Investments
Another approach is cashing in on some of your investments. Maybe you have some stocks or bonds which you can sell. On the other hand, maybe you own some expensive jewelry you can profit from or interesting artwork you can find buyers for.
Additionally, you can look through your current home and see if there are any things you no longer use. Then, you can organize a yard sale or sell the items online. That way, you can also earn a good amount of money.
Set up a Separate Savings Account
Last but most certainly not least, a great way to save money for a down payment is to open up separate savings account where you will keep all the funds for this purpose. All the money that you get from your second job or any other side income should be put into this account.
The most important thing is to remember what this account is for. That means no dipping into it for any kind of vacation, smaller purchase or even an emergency (for which you should have a separate fund, by the way!).
Letting money pile up in this account can allow you to purchase the home of your dreams, without having to borrow a huge loan.
There you have it – lowering your expenses, setting up a savings account, preparing on time and looking for a new source of income can all come in handy when saving up for a down payment.
Don’t look at this as a huge expense, but think of it as an investment in your future
Identity Magazine is all about guiding women to discover their powers of Self-Acceptance, Appreciation, and Personal Achievement.
We ask that every contributor and expert answer the Identity questions in keeping with our theme. Their answers can be random and in the moment or they can be aligned with the current article they have written. In that way, and as a team, we hope to encourage and motivate each other, thus inspiring you to Get All A’s.
What have you accepted within your life, physically and/or mentally? Additionally, what are you still working on accepting? Now, we’re not talking about resignation, rather stepping into, embraced, and owned.
I accepted diversity in the world and the beauty of telling your honest opinion on things.
Appreciation is everything. What have you learned to appreciate about yourself and/or within your life, physically and mentally? On the other hand OR in contrast, are there elements of who you are that you’re still working on appreciating?
I appreciate my ability to connect with people, to share their stories.
Share with us one of your most rewarding achievements in life? Tell us not only what makes YOU most proud but also share the goals and dreams that you still have.
My biggest achievements are my 4 friendships for life ( Jen, Nico, Teo, Andrea – love you)!