Andrew Asks… I want to buy a home but am having trouble saving money for a down payment. Any advice?

Andrew,

You are not alone when it comes to finding out that saving money for a down payment is quite challenging. In a recent survey conducted by Trulia, 70% of people said that owning a home is ultimately part of their “American Dream,” and saving money for the down payment is the number one obstacle they face in achieving their dream of home ownership.

Since this seems to be an issue plaguing many aspiring homebuyers, let’s take this as a chance to outline a few things you should consider in anticipation of saving for your down payment.

  • Determine your down payment funds. Ideally when purchasing a home you want to put down a 20% payment on the property. If you find yourself in a financial situation where you can’t save for a 20% down payment then you can take out Private Mortgage Insurance which will allow you to pay a lower down payment. You can usually stop paying mortgage insurance once you have reached that 20% mark. Finally, look into organizations such as the Federal Housing Administration or State Housing Authorities because often times they can help you purchase a home with a lower down payment.
  • Outline a property that works for you. Find a home that is right for you at this point in your life and don’t be unreasonable when it comes to estimating the budget you have set out for your purchase. This means that you must consider everything. Size, location, amenities etc. With the state of the economy, many people are quickly realizing that a 3,000+ square-foot home is no longer a necessity.. Or that a new home in the neighboring suburbs in much more realistic than one in the heart of the city. By understanding your limits, you will make saving for a down payment much for successful.
  • Be smart about saving your money. To be sure that you are not tapping into your savings for other things such as car payments, make a separate account that is devoted to your down payment. Also, figure out which monthly expenses you can eliminate.  ie… premium cable channels, daily Starbucks visits, items you don’t really need

If you put some effort into saving your money and cut back where you can you will be in a better financial situation when it comes time to make a long-term investment like a home in no time!

Meet Cheryl!

About Cheryl

As a successful business owner and community leader, Cheryl Braunschweiger is known and respected for getting things done with a degree of skill and enthusiasm that bring out the best in those around her - colleagues, clients and friends. The name of her business, ALMC Mortgage, reflects Cheryl's philosophy and personality. She says it stands for All Loans Must Close –a reflection of her determination to do whatever it takes to serve her clients. Cheryl has been in the mortgage lending business for 20 years. Read More About Cheryl
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