Tips on Saving for a Down Payment
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1. Create a Budget and Set Goal
Creating a budget will show you how much money you have coming in on a monthly basis compared to how much money you are spending on debt and living expenses.
* Search for free resources you can utilize to assist you such as personal budgeting software from sites like Quizzle.com*
2. Open a Separate Savings Account
Having a separate savings account for your down payment is useful for a couple of reasons. Your down payment won't be mixed with other funds and spent accidentally. It's much easier to track your progress; just take a peek at the account balance.
3. Payroll Deductions
The first step to having more money would be spending less, and one of the most effective ways to spend less money is by hiding it from yourself. Allocation a portion of your special saving account, automatically, helps you keep your hands off of it until you have a down payment.
4. Refinance Current Debt
If you're still paying off a loan, do some searching to see if you can refinance through a new lender. Many times, banks and credit unions will offer lower interest rates for auto and student loans if you refinance through them. You can also refinance credit card debt, but please beware, that depending on your current interest rate, it may not be worth it.
5. Put away the Credit Card
Not only will you avoid making unnecessary purchases but you'll also prevent increasing your debt-to-income ratio which lenders will scrutinize.
6. Avoid going out to Lunch and Dinner
I understand it can be very tempting to go out to lunch and dinner, but it can also be very costly! Think about this: If you were to go out to lunch each day, 5 days a week, you may be spending an average of $50 a week just on lunch! By just bringing your lunch, you might only spend $10 each week. This doesn't even take into account how much dinner would add to that equation. It's just not worth it.
7. Change the Withholding Taxes
Your take-home pay will increase, giving you more funds to put toward a down payment.
8. Deals, Deals, Deals
Look for deals wherever you can find them. The savings might seem small at the time but over time the savings add up! So coupons, promotions and website savings codes are your friend.
Second job, Carry cash only, 401k, Tax Refund, IRA's, Roommate, Assistance programs, Sell stocks, borrow from friends and family.
Note: Check your credit
Yes, your credit score will be a major factor when it comes to your home mortgages. It's the difference between a great interest rate, a good interest rate, or being turned down for a mortgage.
Make sure you check your credit score several months before applying for a mortgage. If your score is less than excellent, start slowing working to increase your credit score as you save for a down payment.