Quick Money Saving Techniques for a Mortgage Down Payment

by Joyce Powers 12/01/2019

Buying a home will likely be one of the largest financial decisions you will make in your lifetime. While this may seem scary at first, it’s worth noting that buying a home can also be a valuable financial investment.

When it comes to preparing to buy a home, many people just wait until they run out of room in their apartment before deciding that they need to upgrade to a home. A better approach, however, would be to start planning for your first home a year or more in advance.

Saving for a down payment is a vital step to making the best long-term financial decision. A larger down payment can help you pay off your home sooner, pay thousands or tens of thousands less in interest, and start using your home equity as an asset.

But, saving for a down payment is easier said than done. So, in this post, we’re going to talk about some of the ways you can aggressively save for a down payment so that, when the time comes, you can achieve long-term financial security from your investment.

Setting your savings goals

The first thing you should be thinking about when saving for a down payment is what your goals are in a home. Setting realistic goals in this phase will make saving for your down payment more feasible and less discouraging.

Think about what you really need from a home at this point in your life and compromise where you can.

Remember that on top of your monthly mortgage payments, you’ll likely also be paying for taxes, insurance, utilities, homeowners association fees, and more.

Save on a timeline

When setting your savings goal, make sure you’re aware of the timeframe you’re working with. If you want to buy a home next year, you’ll need to focus on short-term savings options. However, if you’re okay with renting for the next 5 years, investing your money could be a better option.

Lock away your savings

Treat your down payment savings like an emergency fund. Open a separate account, automatically deposit a portion of your pay into the account, and never withdraw from it. To do this, you will, of course, need to already have an emergency fund with a month’s expenses in it.

However, once you’ve established your emergency fund, start immediately depositing into your savings account.

Pay off credit cards

It may seem like saving for a down payment is more pressing than paying off old debt. However, the numbers will show that making interest payments on your credit cards is essentially throwing away money that could have been used toward your down payment savings.

Adjust your spending habits

While it isn’t easy to start spending less once you’ve built a standard of living, there are ways to spend less money and still lead a fulfilling life. Think about where your money goes each month, including bills and services you might pay for.

Now could be the best time to cut the cord and start using a service like Hulu to save $50 or more each month.

Time for a raise?

If it’s been some time since your last pay raise, now could be an ideal time to speak with your employer. To improve your chances of success, don’t discuss reasons outside of work that might be influencing your decision to ask for a raise (such as saving for a down payment). Rather, back up your request with evidence of your accomplishments at work.

About the Author
Author

Joyce Powers

 After leaving a successful career in the financial industry, I did much soul-searching and found myself drawn to the real estate industry. When you consider that the most important investment most people make is their primary residence, I thought this would be a perfect second career for someone with my background.

I became a licensed NYS Realtor and I am currently a NYS Licensed Associate Real Estate Broker affiliated with KMS Realty Group and a member of the Staten Island Board of Realtors. I've also obtained the following Designations and Certifications: ABR (Accredited Buyer's Representative), CIPS (Certified International Property Specialist), CNE (Certified Negotiation Expert), CSSP(Certified Short Sale Professional), GREEN (National Association of Realtors GREEN Designation), SFR (Short Sale and Foreclosure Resource), SRES (Seniors Real Estate Specialist). Since 2010 I've been a Top Producer of the Staten Island Board of Realtors. I’ve also served on various committees at the Staten Island Board of Realtors, including the Grievance Committee and the Professional Standards Committee and I'm currently a Director of the Staten Island Board of Realtors.

As a professional full-time Realtor, I will guide you through one of the most important financial decisions you will make - whether it is buying or selling your home or investing in real estate properties. I will be by your side every step of the way.