In 2019, about 681,000 homes sold in the United States. That’s 10.3% more than 2018.
If you’re hoping to achieve your dream of buying a home in 2020, the first hurdle is saving for a down payment.
No matter how you look at it, buying a house is expensive. It’s most often the hugest investment a family ever makes.
Though you don’t have to pay for the full price of the house upfront, you still need to pay a percentage to close the sale. This percentage is what’s called a down payment.
Are you interested in learning how to save for a down payment? Keep reading to find out the best methods.
5 Ways of Saving for a Down Payment
Down payments are the most dreaded aspect of home buying for everyone.
Most lenders want you to make a 20% down payment. A home selling for $90,000 would put a 20% down payment at $18,000. That’s no small chunk of change.
Let’s explore how to save for a house using different methods:
1. Debt Free
Are you asking yourself, “How much money do I need to buy a house?”
If you haven’t yet, you should. You can’t save for a down payment without a plan.
There’s no hidden secret for how to buy a house with no money. It’s an inescapable fact that buying a home takes a lot of money. It’s this very reason that so many people struggle to buy their first-time home.
The first thing you must do before you can start saving for a home is getting debt-free. Many people look into debt consolidation services like Debthunch to help them pay off outstanding bills faster.
2. Estimate Your Down Payment
Once you’re debt-free, you can start setting aside funds for your house money savings. Make an estimate of what your ideal home costs. Then calculate 20% of that for your down payment.
Next, decide how much per month you can put toward the down payment goal. Take the home full-price and divide it by the amount you can save each month. The answer will tell you how many months it’ll take you to get there.
3. Save Some of Your Tax Refund
If you’re expecting to receive a tax refund, make plans to set aside a certain amount.
Are you expecting to get back about $4,000? Spend a portion however you see fit. Take your family on vacation or out for a nice dinner. Maybe pay off any remaining debt.
Use the remainder to pad your savings account for that future dream home.
4. Make a Savings Plan
Saying you want to start saving money and doing it are two separate things.
Create a schedule for yourself when it comes to making savings deposits. Treat it like a bill if you must. Give yourself a date and make a set deposit each month.
Many savings accounts will even let you automate your deposits.
5. Use a Budgeting App
It’s difficult to keep track of all your expenses and budget and also save money. Luckily, you don’t need to try and work out all the math yourself anymore.
There are many apps out there that will help you keep track of your budget.
Everyone Deserves a Dream Home
So long as you make a plan and stick to it, you’ll be fast on your way to saving for a down payment. Buying a home is a huge investment, and one of the most difficult purchases you’ll ever make. Follow these top methods, and you’ll achieve your dream.
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