Building our dreams takes time and effort. However, if you start to grease the gears now, you will wake up one day with more than enough money that could pave your way to homeownership.
1. Trim those small unnecessary expenses.
Saving money for a house is not a primarily grueling sacrifice. “It’s about lifestyle change,” according to Travis Sickle, a financial adviser with Sickle Adviser Financial Advisor from Tampa, FL.
You could try the following cost-cutting technique without feeling pressure.
- Save $2,880 per year by replacing your $250 monthly cable service with a $10 Netflix Standard Streaming service.
- Go running instead of that languishing gym membership fee of $50 per month. You will save $600 in a year!
- Keeping all your loose change can have a significant impact, so start your coin jar now!
- Control those dinners and drinks out, which can add up very quickly. If you typically spend $40 three times a week, reduce it to one evening per week, and you will save $4,160 per year!
It is identifying the silent money siphons that you barely notice is a more sustainable strategy.
2. Open a dedicated account.
If you don’t have a savings account, now is the time to open one. Aside from earning interest from your balance, having a specific place to keep your down payment has a lot to be said for the mental benefit, and you will be grateful when it is time to get a mortgage. After all, it is great to see how you are progressing towards your goal by just having a dedicated savings account. For higher gains, consider getting CD or money market accounts.
3. Automate your savings
Consider automating the process if you are constantly struggling to put enough money into your savings account. Ask your company if you can have your paycheck placed into multiple accounts. If so, instruct to send a certain percentage of your salary into your savings account. Or, go through your bank and set up an automatic transfer from your checking to your savings account
4. Traditional or Roth IRA
These are great retirement vehicles, and they allow you to withdraw up to $10,000 for a home. Merged with other savings, it can quickly add some heft to your down payment. Just be careful with these methods, as you will be denting your retirement fund.
5. Down Payment Assistance Programs – DC Open Doors
DC Open Door (DCOD) grants deferred repayable loans for a homebuyer’s minimum down payment requirement in addition to below-market interest rates for first trust mortgages for the purchase of a home in DC. Financial assistance through DCOD is in the form of a deferred 0% non-amortizing (no monthly payments) loan that is due and payable upon any one of the following: thirty (30) years from the date of loan closing; sale or any transfer (by gift or otherwise) of the property to another person, business, or entity; property ceases to be your principal residence or refinancing your first trust mortgage.
Once you successfully save for your down payment and closing costs, it is time for you to start shopping for a home! And, to do that, you need to determine how much you can afford.
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