Saving For Your First Home
By Greg Sullivan
If you have done any research on home buying at all, you have probably learned that there are many costs associated with home buying in addition to the mortgage itself. Legal fees, property taxes, insurance, home appraisal fees, and closing costs can easily add up to thousands. The best scenario for financing a home is having a considerable down payment on hand. A down payment will reduce your monthly payment as well as the interest you will pay over the course of the loan, and a down payment of at least 20% will eliminate the need for private mortgage insurance.
There is no concrete rule dictating how much you should save for your down payment, though a good rule of thumb is to save as much as possible! Here we offer some suggestions to help you save up a sizeable down payment for your home purchase:
- Plan ahead. Once you decide you want to purchase a home, do not expect anything to happen overnight. It may take a year or two, or longer, to save up the funds you need to get started. Do not let a long timeframe discourage you. Everyone has to start somewhere.
- Downsize. If you are currently renting your home, you may consider downsizing to a less expensive home or even moving in with a willing family member while you save up. This arrangement will likely force you to give up some of the amenities and convenience to which you are accustomed, but it is a short term sacrifice to reach your longer term goal. Reduce your standard of living temporarily and sock away your savings into the home fund.
- Boost your income. Some people choose to take on a second job or do contract work on the side to increase their income while saving for a home. If you have the option, consider seeking out a means of bringing in additional income, then save every extra cent. Working extra may not be the most appealing idea, but it is important to maintain focus on your goal and remind yourself that every penny is propelling you closer to it.
- Lose some amenities. Reduce your cable package or get rid of it altogether. Analyze your cellular phone plan and look for any opportunities to cut it back. Wash your car yourself instead of taking it to a car wash. Rent movies instead of going to the theater. Purchase items in bulk at discount outlets. When you eliminate a cost, deposit that amount into your home savings account.
- Stick with it. Scrutinizing every expenditure for an extended period of time can feel exhausting. To save up a down payment for a home, you may need to accustom yourself to a lower standard of living temporarily. That is not to say that you have to deprive yourself of pleasure completely, but rather seek out cost cutbacks that still allow you to enjoy life. For example, if you love going out to dinner, give yourself limits for frequency and cost.
Saving up for your first home is about consistency and self control. When you feel your inspiration to save money is waning, check out homes in your area on the internet or in person to serve as a goal reminder to help keep you on track. Home sweet home will feel even sweeter when you know you truly earned it.
About the Author:
Greg Sullivan is the President of www.electronicappraiser.com, a leading provider of home appraisals offering a nationwide personalized instant home appraisal service.
Article courtesy of www.goarticles.com.
