Before you can make the transition from renting to owning a home, you may need to have a down payment. Down payments typically range from five to 20 percent of the home’s value but this can vary depending on the house you want to buy, the property type and the loan program you go with. Here are seven tips to help you save for your forever home.
Tip #1: Develop a budget and timeline.
Start by determining how much you’ll need for a down payment. Create a budget and calculate how much you can realistically save each month. This will help you gauge when you’ll be ready to transition from renter to homeowner.
Tip #2: Establish a savings account exclusively for your down payment.
Then set up recurring payments so, as soon as you get paid, the money is automatically transferred. Consider renaming the account to something like “My First Home” or “Down Payment” to add extra motivation. Heritage Bank makes saving even easier with Save Up, an automatic savings program available for checking customers with both a Visa® Debit Card and savings account. When an eligible debit card purchase is made, Save Up rounds the transaction to the nearest whole dollar and automatically transfers the excess to your designated savings account.
Tip #3: Shop around to reduce major monthly expenses.
It’s a good idea to check rates for your car insurance, renter’s insurance, health insurance, cable, internet or cell phone plan. There may be deals or promotions available that allow you to save hundreds of dollars by adjusting your contracts.
Tip #4: Monitor your spending.
With Heritage Bank’s free financial management tool, Money Management, you can plan, save, analyze and prepare for your financial future on any device at any time. Money Management lets you view transactions, create spending categories, set budgets, view spending and income over time and more. Identify areas where you could cut back (e.g., nice meals out, vacations, etc.) and instead put that money into savings.
Tip #5: Look into state and local home-buying programs.
Qualifying applicants can secure a loan through Heritage Bank with low or no down payment, down payment assistance, low or no monthly insurance and fixed and adjustable rate options. Many states, counties and local governments also operate programs for first-time homebuyers.
Tip #6: Celebrate savings milestones.
Saving enough for a down payment can be daunting. Avoid getting discouraged by breaking it up into smaller goals and reward yourself when you reach them. If you need to save $10,000 total, consider treating yourself to a nice meal every $1,000 saved. This will help you stay motivated throughout the process.
Tip #7: Seek help from friends and family.
Instead of asking for gifts around birthdays or holidays, consider asking for cash to put towards your down payment. Every little bit helps!