If you’re tired of renting and looking for a more permanent space, you’re likely looking to purchase. Before the fun of house hunting or furniture shopping begins, there is an essential, often dreaded step – saving up for the down payment. While coming up with a down payment might seem daunting, it doesn’t have to be.
Are you currently looking to make the leap into homeownership or planning to purchase in the next few years? No matter the timing, it’s important to strategically save up for the down payment – here are our favorite tips to save:
Set Attainable Goals
A goal will help keep you on track throughout your entire savings journey, but before you begin saving, you will want to set clear, realistic goals. There will be two separate goals working in tandem – the dollar amount you need to save and the time frame to save it in. Remember, the more aggressively you save, the quicker your down payment savings will grow.
Evaluate Current Expenses
It’s time to flex your budgeting skills! When you sit down to look at your typical expenses, there will be two basic categories – essential expenses and optional expenses. Essential expenses are expenses required for living like housing, insurance, groceries or transportation. Optional expenses are expenses you can easily live without like a gym membership, entertainment subscriptions, frequently going to restaurants or a rigorous beauty routine. Realistically, cutting out or scaling back on optional monthly expenses is a surefire way to ensure your down payment savings grow exponentially.
Eliminate Frivolous Spending
If you’re not willing to sacrifice on monthly optional expenses, you can still have an aggressive approach to savings by cutting out large expenses. As much as you look forward to that annual beach trip, it might be wise to forgo it this year – think of the money you’ll save on transportation, lodging, food and activities. If you have your eyes on the newest model of your dream car, it might be wise to tap the breaks on purchasing if you still have a form of reliable transportation – the down payment and monthly payment will help bulk up your down payment.
Generate Extra Income
If you’re not looking to scale back on spending, find ways to ensure more income! This is the perfect time to take up a side hustle and, hopefully, turn your passion into profit. Some popular side hustles include: food delivery, ride sharing, tutoring, dog walking, babysitting, blogging and cleaning.
A 20% down payment was long considered the industry standard, but that isn’t necessarily true. At PrimeLending we have loan options to fit the needs of our borrowers. To learn more about our various down payment structures, contact a PrimeLending home loan expert today.