Your first home purchase is on the horizon, but to get there you’ll need a hefty down payment. Have you considered setting up a mortgage savings account?
Saving up for a down payment can seem daunting, but many new home owners are accomplishing this task. In 2016, 35% of home purchases were made by first-time buyers.
With some dedication, you can join them and finally move into your very own home.
How much will I need to save?
Most lenders want a decent-sized down payment before they’ll consider lending you the rest of a property’s value. They are likely to ask for a payment in the region of 20% of your property’s value.
If you’re a veteran, you can get special VA interest rates to help you on your way. If you qualify for a VA loan, you may also find that you can buy a home with little or no down payment.
Opening a mortgage savings account
If you don’t already have one, go out and start a mortgage savings account. Whatever you do, don’t touch the money in the account once it’s paid in. It’s for your house.
Set up regular payments from your bank account on the days you get paid to move a set sum into your savings.
This is an effective strategy. If the money is moved before it’s in your palm, you won’t be tempted to spend it on something else.
If you get a pay raise at work, don’t forget to put some of the extra income into your savings. If you never had it in your pocket, how can you miss it?
How am I going to save up?
Live frugally
One of the best ways to save money is by cutting back on luxuries.
Instead of buying brand-name items, buy store-brand products instead. Rather than spend money on a gym membership, buy some weights or get your exercise by doing outdoor activities.
Frugal living can save you a huge amount of money in the long run. All the small changes really add up.
Earn cash on the side
There are a number of surveys, product tests and other schemes which are always on the lookout for new participants.
There’s also the option of working a part-time job in addition to your main job. One in five Americans makes money outside of their day job. Join the ranks and build your mortgage savings more quickly.
Save a bit extra as you go
Here’s a simple system you can use to top up your mortgage savings account each week. Take all of your pocket change each week and put it toward your savings account.
You’ll be surprised how fast this can grow your savings pool.
How to keep motivated
The best way to keep motivated is to think about how good it’ll feel when you finally have a home to call your own.
If that doesn’t work, think about all the rent you won’t have to pay a landlord.
It might take you a little while to save up, but with some sacrifice, you can make it.
You’ll be putting in an offer for a new home before you know it.