Buying a house for your family, most of the time, involves getting a loan. Unless you are loaded with money and buy it purely with cash, you are going to need to borrow some money. You are going to need to come up with a down payment.
Sometimes the down payment can range between 20 to 25 % of the purchase price. If you are a first time buyer, however, you may qualify for an FHA loan where the down payment can be as low as 5% of the purchase price. In any event, you will still need money saved up.
First thing you need to know is figuring out in what neighborhood you will purchase your home. That will give you a clear picture of what the property market price is
What can you afford
To get an idea of the property prices in the neighborhood you want to buy your property in, look at online real estate website like Zillow.
Also, go talk to a real estate agent or a broker in your neighborhood.
Getting a clear idea of what the value of a home is, you will know how much you can afford and eventually you will know how much you can start saving for your down payment.
Related: Apply for a Mortgage Loan Today
How much for a down payment on a house?
As I mentioned earlier, buying a home usually involves a down payment. In fact, the biggest cost you will encounter is usually the down payment.
A down payment of 20% of the purchase price is ideal. You are allowed to put more down if you want or can afford it. In fact, the more money you put down, the less money you will have to borrow from your lender.
If you a first time home buyer, you may qualify for an FHA loan where the down payment can be as low as 3 to 5% of the purchase price. See the following article for more information on FHA loan: Why FHA Loans Makes Better Sense to Finance Investment Property.
How to save for a down payment on a house?
Saving for a down payment for a house can take a long time, making it more important to start saving early. In fact the earlier you start saving, the more money you will save and the quicker you will reach your down payment saving goal.
Second, figure out how long it will take you to save for your down payment and how much you need to put aside either weekly or monthly.
Third, open a high interest savings account specifically to build your down payment. Once you know how much you can save, choose a high interest account specifically for it. If you commingle your down payment savings with your regular savings account, you might be tempted to use the cash.
So choose a high interest savings account so you can earn compounding interest. Fourth, transfer money to it automatically.
Lastly but not least, create a budget to see whether you can save more, whether you can cut on extra or unnecessary costs. For more tips on how to create a budget see, Create a Budget and Stick to it.
Related: Apply for a Mortgage Loan Today
Conclusion
Buying a home is fun and exciting, but it also a big step that cannot be taken lightly. With discipline and careful saving, buying a home and saving for a down payment can be made easier.
Are those tips about saving for a down payment for a home helpful? Why or why not? Please share your thoughts in the comment below.
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