The idea of making a down payment can be daunting. With most loans expecting 20 percent down, that usually requires a large sum of money and heaving planning. If you’re wanting to buy a house, there are a few ways to save. Whether you’re saving on your own or have help, you can make saving money interesting and faster than you thought.
Cut expenses
If you have bills or other expenses you can either cut or make cheaper, do it. Change your monthly cable bill to an $8/month Netflix charge. Even calling your provider of cable, telephone, and other charges to see if your monthly expenses can be lowered. Saving even a little bit can help with your overall down payment. Also, cut excessive spending. Start bringing your lunch to work and plan your meals ahead. Don’t rely on take-out or going out to dinner.
Save your money
One trick to saving for your down payment is matching your savings to your spending. If you go shopping, make sure you have enough left over to put that same amount into your savings. So if you spend $50, move $50 to your savings. This will keep you more conscious of your spending habits, but also allow you to save.
Take your savings and invest in them. Depending on when you want to buy, you have different investment options. According to CNN, if you’re planning buy a home in 10 years, invest 50-60 percent in stock and 50-40 percent in bonds. If it’s going to be 5-7 years, invest 50 percent in long-term bonds or individual bonds and 40 percent in short-term bonds that will mature in 1-3 years. If you’re looking for a shorter turnaround time, looking into certificates of deposit (or CDs). These offer higher interest rates, but you have to keep the money in longer and face fees if you withdraw earlier. If you’re planning on buying within a year, look at savings accounts that have a higher yield. Online accounts like Ally or Synchrony Bank pay around 1 percent annually.
Get creative
If you’ve got a hobby, turn it into a way of making some extra cash. If you make pieces people are willing to buy, sell them on Etsy, Facebook, Instagram, or even Ebay. If you don’t have the crafty gene, just reward yourself when you’ve reached a savings goal. You don’t have to spend money to reward yourself, just go on a hike or have a relaxing day in.
Find more information on How to Start the Home Ownership Process from Cook Residential.
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