If you’re interested in buying a home and you need to save for a down payment, there are five handy ways you can do so. For a few additional tips,check out the first part of this message here.
First, remember that you don’t need to put down at least 20% down to purchase a home. That’s a common misconception many people still believe, but there are loans out there that require as little as 10%, 5%, or even 0% down. What you need to qualify for in terms of your down payment depends on how expensive your home purchase is.
Next, set a target goal for your savings. Meet with your agent to figure out what your budget will be and what purchase price you intend to qualify for. During this time, we also talk with our clients about what kind of closing costs they need to save for.
After that, assess your spending habits. A lot of people don’t realize how much they spend doing simple things like going to Starbucks or eating out.
With those tasks in mind, here are the five specific ways you can save for your down payment:
1. Reassess what you spend on insurance. Many people don’t realize, for instance, that insurance companies can bundle your home, auto, and life insurance under one policy in order to help you save. Switching companies can also help you save money.
2. Reassess your grocery bill. Sometimes, cutting out extra items like potato chips or ice cream can make a big difference over time.
3. Shrink your TV package. A lot of people don’t realize all the extra fees they’re paying for certain programs. Cable bills can cost as much as $100 or $150 per month, so look through your TV package and see what you can cut out.
4. Cancel your gym membership. So many of us get a gym membership as part of our New Year’s resolution only to give up soon afterward, stop going to the gym, but still pay the monthly fee. You can save a lot of money in this case by just canceling your membership and exercising at home.
5. Sell some stuff. As the old saying goes, “One man’s junk is another man’s treasure.” There are plenty of ways (garage sales, estate sales, eBay, etc.) you can sell some of your old, unused items and make thousands of dollars doing so. If you have a garage or storage shed full of these kinds of items, look through it and see what you’d be able to sell.