Tips to Help You Save For Your House Down payment

Tips to Help You Save For Your House Down payment

  When buying a house, you can make huge savings if you will give a big down payment for your loan. Doing so will enable you to receive better loan terms from your lender which include lower interest rate for a shorter duration.  

Saving for your house down payment can be very difficult. It could mean changing your lifestyle, sacrificing your other personal goals, and living simpler. If you have decent earnings, it can surely help. It takes a lot of discipline in order to aggressively save for a year or two. In order to help you plan how to save, read the following tips. 

Tip #1: Determine how much you need to save 

In order to know how much you need to save, you first need to understand how much mortgage you can qualify for. There are many mortgage calculators online that will help you compute for the mortgage. However, it will be better if you will sit-down with a mortgage lender so that you can fully understand the computation and you can get professional advice on how to be approved for the loan. 

Tip #2: Determine your time frame 

Determine when you want to buy a house. By doing this, you can figure out how much you need to save every year. For instance, you want to buy a house 5 years from now which requires a down payment of $45,000. This means that you need to save at least $9,000 every year. If you have a shorter timeframe, you will have a higher annual savings goal. 

Tip #3: Determine the best method of saving for you 

Since you know exactly your purpose for saving, it is not advisable to save money in risk-type investment options such as stock, foreign exchange, real estate investment, trusts, etc. Go with the safest route which includes the boring old savings account or a certificate of deposit. It is inviting to invest your savings in higher risk vehicles since you want it to grow more but it can backfire on you if the market becomes unfavorable. 

Tip #4: Make room in your budget 

Now that you know how much you need to save per month, you also need to determine how much you need to budget for your monthly dues. You must have enough resources to cover both: savings and expenses. If your income is not enough, maybe it’s time to consider having a double job or cut-off some more from your expenses.