If you are reading this article, odds are you are gearing up to purchase your first home. So, first of all: congratulations! This is a huge step in life that is equal parts rewarding and exciting.
However, there are some details that need to be carefully considered before you are officially a homeowner. This guide will focus on saving for a house down payment: how much you should save and other considerations.
If you still have questions after reading our guide, a qualified mortgage professional can help.
How Much Should a Prospective Homebuyer Save for a House Down Payment?
This is an important question, and one that has many possible answers. In general, the advice you’ll hear consistently in response to this question is 20%. Most professionals in the field suggest that homebuyers set aside 20% of the home’s value for a down payment.
What are some Tips for Saving for a House Down Payment?
The following list will provide some of the best tips and advice for creating sufficient savings for your house down payment.
- Save All Unexpected Earnings from Work. Receiving a raise or a bonus is an exciting accomplishment. This is generally the result of you performing excellent work and your employers taking notice. But while you should celebrate your accomplishment and be proud that you received a raise, you should resist the temptation to spend the extra money on something frivolous. Remember: you need to save every penny you can for your house down payment. Even though it may seem unnecessary now, you’ll be glad you took the steps you did when you end up saving thousands of dollars over the life of your loan.
- Get a Side Job. If you have a skill you can put to use, such as teaching music lessons or mowing lawns; you may consider picking up a few extra hours of work on the weekends. While these side jobs won’t pay a ton, every little bit helps.
- Tighten Up Your Budget. You should be mindful of your spending when saving for your down payment. Pay close attention to the price tags at the grocery store and make sure you are reaching for the more affordable items rather than the premium ones.
While the above tips may seem overly restrictive, remember that this is not the way you’ll have to live for the rest of your life. These tips are designed strictly to help you save for your house down payment. Once you’ve put down a good chunk of money and qualified for a good mortgage rate, you can begin to relax a little bit and return to some of your old habits.
Saving for a house down payment is not easy. It often requires that you make sacrifices and abstain from certain activities that you are used to doing. But remember, once you’ve made the down payment, you can return to your normal spending habits, so long as they are sustainable with your new mortgage.
If you find the process of saving for a house down payment hard to navigate, reach out to a mortgage professional. These housing experts would be happy to help guide you along the way. The experts at Rex Homes have provided some additional information as part of this guide on their website here: https://blog.rexhomes.com/down-payment-savings-guide/