Buying a home is one of those big milestones in life that many expect they’ll do someday but aren’t quite sure how to get there. In order to be approved for a mortgage, you’ll need to overcome the first and biggest hurdle: having enough money for a down payment. Saving for things is hard, especially when you’re trying to save up a considerable amount. That being said, these savvy money-saving tips might be just what you need to help you get there, sooner rather than later.
How Much Money Do You Need For A Down Payment On A Home?
The amount you’ll need for your down payment will greatly vary depending on your lender and financial situation. Typically, down payments range from 5% to 20% of the home’s value, so a home that’s $250,000 and a loan with a 20% minimum down would require a down payment of 50,000. If it’s your very first home, there could be some grants and resources available to help you get there, so you should definitely consult with a local mortgage expert to find out more about your particular situation.
Tip: If you are curious to speak to a mortgage expert, let us know! We'll be happy to refer you to our trusted brokers.
Tip No. 1: Set Up A High-Interest Savings Account
First thing you’ll need is an account with a great interest rate to help you save. Many of the accounts with a better interest rate will require an initial deposit ranging from $1 to $1,000, so it can pay to shop around for one option that fits you best. That being said, your down payment is too valuable for a risky investment, so save it somewhere with very low-risk. A good option for those who struggle with the temptation of using their savings for spontaneous purchases should opt for something like a term deposit, where the money is locked and inaccessible for a length of time.
Tip: Don’t forget to consider online banks! They have a much lower overhead (having very little or no branches to operate) so they can often offer better rates than conventional banks.
Tip No. 2: Automate Your Deposits
You can set up automatic payments for your bills, so why not do the same with your savings account! Setting automatic deposits can help you stay on track with your savings and streamline your efforts. The key is to aim for a sustainable amount each month. You don’t want to be deposited so much money into a savings account that you can’t live comfortably or have extra cash on hand in case of emergencies.
Tip No. 3: Save (Some) Of Your Gifts
When you receive any lump sum of cash, find a way to split it so you can reap the immediate rewards and still help save for the long term. Split it 50/50, 30/70, or whatever you’re comfortable with.
Tip No. 4: Find A Way To Make Extra Cash
This one might seem a bit obvious, but there are a few ways to make a little extra cash without giving up all of your spare time. Pick something you’re good at and find a way to make it profitable, then have the money from these channels deposited directly into your savings account. Here are a few ideas to help get you started:
- Create a YouTube channel or start a blog with WordPress
- Creative? Sell your stuff on Etsy!
- Sell your used items on eBay, Kijiji, or LetGo
- See if you can take advantage of Airbnb
- Become a professional reviewer
- Tutor, teach guitar lessons, walk dogs, or offer cleaning services
All of these little efforts can help you save big bucks without even realizing it. When it comes time to make your move, get in touch with the My NC Homes team to help you find a home that fits your needs and budget. For more information about Durham, Chapel Hill, or Cary homes for sale, get in touch with them online or by phone at 919.659.5173.
Posted by Larry Tollen on
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