If you are currently renting a home, condo or an apartment because you do not think that you can save enough money for a down payment for your own home you could be thinking incorrect. Saving for a down payment could be easier than you think. Many people are actually paying more in rent than they would if they would be paying a mortgage payment. With these few tips to save for a down payment renting could be a thing of the past.
Reduce Your Large Expenses
If you really want to save money for a down payment you are going to want to reduce your large expenses. One of your largest expenses is your cost of rent. You should try to negotiate a better monthly price with your landlord or move to another place that will not cost you as much every month. This might involve moving further away or downsizing a little but once you are moved into your new home that is all yours you will find that the sacrifice was worth it. Another way to reduce your rent cost is by finding a roommate to help split the rent cost. This is a way to stay where you are but save about half of the money every month.
Have An Automatic Savings Contribution
A perfect way to save money is to have your payroll department deposit a certain amount that you choose into your savings account every paycheck. This will help you to save money without having to stop and think about it.
Save Any Financial Gains
If you happen to come across any financial gains during the year you should not spend it and put it away into your savings. Many people are tempted to splurge and spend this money. This is the time that you should maybe open a savings account that is designated as your down payment savings account and do not spend that money.
Do Not Save As Much For Retirement Right Now
Normally someone would not suggest saving less for retirement to save for something else but this can work if you have an employer that matches anything you contribute to the retirement account. If you do you can start contributing a smaller amount for the time being until you have your down payment saved. This does not mean to empty your retirement account out for the down payment.
Borrow Money From Family And Friends
One of the best ways to obtain the money needed for a down payment is to borrow money from a family member or a close friend. Many first time homebuyers will receive a gift of funds from someone to help them make the down payment that is needed. Of course there are some financial rules that are in place that will allow parent to gift their children only so much money for this purpose. However it could be that the mom gives the daughter in law a check and a check to her son when at the same time the father is doing the very same thing. This will allow each parent to contribute to the down payment account.
When trying to save a down payment for a new home you might find that it is not easy. However if you follow the tips above as well as trying to cut back other costs such as your daily cup of coffee from your local coffee shop you might find that you can save money faster than you originally thought you could. All it takes to accomplish this is a little bit of commitment.
Image Credits: John, Audz and Ethan Goodridge