Down payment is hands down the first and biggest obstacle that stands in the way of you becoming a homeowner. It is a considerable sum of money upfront to purchase a house or other expensive things.
Where should you save the down payment money?
The money for a down payment should be kept where it is easily accessible such as in a bank account, savings account, brokerage account or the stock market.
Now, to the main question. How can you save for a down payment? Here are some tips for saving money for a down payment if becoming a homeowner without worrying about financial debts is all you dream about.
1. Take a break from other saving goals
It is common for people to have many saving goals. But since you are saving for a down payment, take a break from your long-term plans for this immediate purpose. This short-term saving goal can help you pay your down payment as soon as possible so you can carry on to your long-term goals afterwards.
2. Cut your expenses
Another great way to save more money is to cut costs. Expenses are necessary, but some can be stopped, paused for a while, or even cut off so you can save more and more for your down payment. Make a list of all your necessities, priorities, and luxuries so you can clearly know how quickly you can pay your down payment.
3. Find assistance or favours
If you have a corporate job, you could always ask for a raise or bonuses that you can save for your down payment. You can call other favours like asking your friends or family for a sum of money that they could lend you. This helps your down payment, and you can return them later or make an installment plan that allows you to return their little by little money each month.
4. Believe in the power of side hustle
A side hustle is one of the most efficient ways of saving because that extra cash from a side hustle can all go into your savings and give it a huge boost so you can quickly get closer to becoming a homeowner.
5. Buy used
Can you imagine how much you can save by buying clothes, shoes, furniture, appliances, vehicles and other goods used instead of new? Since you are trying to save for a down payment, it is important to be more strategic with your buying practices, and this effective strategy (for both wants and needs) can satisfy cravings for new things like outfits while saving pennies.
Usually, a down payment must be paid at the time of the transaction. Therefore, you can only use short-term options for saving money for a down payment. It is usually some percentage of the total cost of the house, and although it is not a fixed amount, it is always recommended to pay the most you can. This is, so you are less burdened with the mortgage and monthly installments. If you work a little harder initially, you will be less stressed about paying the monthly installments.