Buying a house with a mortgage requires a mortgage loan down payment. A down payment is a portion of the total home cost up front. And unless you a first time home buyer, the typical down payment on a house is usually 20 percent of the purchase price.
According to a survey completed by MarketWatch, it can take 12 years or more to save up a 20 percent down payment for a home mortgage.
However, saving money for a down payment on a house shouldn’t necessarily take that long if you know the right tricks. By having good saving habits and sticking to them, you can watch your home savings grow.
This article will discuss ways you can save up $20,000, $30,000 or $50,000 down payment in 6, 9 months or less than a year.
How To Save For a Down Payment On A House Fast
1. Keep your expenses incredibly low.
Cut down some unnecessary expenses like Cable TV. Instead of paying for an outrageous monthly cable bill, subscribe to Netflix.
If you are renting now, another thing you can do to save money for a house is to consider having a roommate. Rent is one of the biggest expenses. When you have a roommate, the rent is split between you two.
Half of the money you would have used for rent can go towards your mortgage down payment instead. That could increase your home savings very quickly.
Another advice is to stop eating out all the time.
The easiest way to see where you can cut on these extra expenses is by doing a budget. In that budget, write down your monthly expenses such as rent, bills and food, and subtract them from your monthly income.
Whatever is left can go straight towards your down payment home savings.
2. Work overtime.
This is where hard work pays off. You can see your home savings grow faster by working overtime. This extra money can go straight to your savings. Another great advice if you’re looking to save money for a mortgage down payment is to have a side hustle. From completing surveys to getting paid watching videos online on your free time, you can make extra money.
3. Tap into your IRA.
If you have a Roth IRA or a traditional IRA, you can withdraw up to $10,000 for your first home purchase without the standard fees and early withdrawal penalty.
4. High-Interest Savings Account.
Opening up a high interest savings account is a great way to save for your down payment on a house. If you leave your money in your everyday transaction account, you might be tempted to use that money.
You will also earn more interest by transferring your home savings to a high interest savings account.
All you need to do is transfer some money into the savings account after each paycheck.
5. Automate your savings.
Grow your savings for a down payment on a house by transferring money to it as soon as you get paid. You can set up automatic transfers online through your bank, or you can ask HR of your employer to send part of your pay to your savings account.
By savings your money automatically it will not only grow faster, you’ll also less likely to spend it.
6. Save Your Raise
If you’re lucky enough to receive a raise this year, let’s say a 3% raise, which is the average salary raise, put that money into your savings account.
In conclusion, if you’re on the market to buy a house, you’ll need some money to pay the down payment on the house. Coming up with 20% down payment on a house is not easy. But if you can keep up with the steps mentioned above, you could manage to save $30,000 for your down payment on a house.
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Work with the Right Financial Advisor
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