Building savings for a down payment on a house in California
There are several strategies first-time homebuyers should try if they want to meet their down payment savings goals.
Buying a home for the first time is exciting and a major financial investment. Although purchasing a home is a goal for many, some struggle to save up for a significant down payment. Generally speaking, it is recommended that buyers set aside 20 percent of the home’s worth as to achieve a better mortgage interest rate, make their offer more attractive to sellers and avoid private mortgage insurance. Those who are unsure of how to save up this much for a new home may benefit from employing the following guidelines.
Cut a major expense
Many first-time homebuyers boost their down payment savings by cutting back on smaller expenses, like cable television and eating out at restaurants. However, one way some buyers make a major dent in their down payment savings is by eliminating a major expense from their budget. For instance, some may want to move in with a family member until their saving is complete to avoid paying rent while others may opt to take public transportation to work instead of making payments on a vehicle.
Withhold money instantly
Putting money away into a savings account can feel like a painful process when so many other routine expenses have to be accounted for. Those saving for a house can enhance their savings discipline by having a portion of their regular paychecks be instantly submitted to an account dedicated strictly to a down payment.
Match savings to discretionary spending
Those who are having trouble spending mindfully may want to try saving as much as they spend on discretionary items every month. For instance, first-time homebuyers who go shopping should calculate the amount of their purchases and transfer the same amount into their savings once the purchase is complete. This may help those saving for a house think about their money differently and prioritize their purchases.
Change your timeline
Those who want to purchase a house quickly may feel overwhelmed at the prospect of saving thousands of dollars in a short time period. Buyers who begin to feel this way may want to readjust their savings timelines so they are still able to save successfully, but still be able to enjoy their life in the present.
After reaching their down payment saving goals, first-time homebuyers may soon realize that purchasing a home can be a complex process. In this situation, buyers should contact an attorney for assistance finalizing important contracts and ensuring the sale goes smoothly.