Date Archives: March 28th, 2022

Saving for a down payment may seem difficult, especially if you're new to the idea of buying a home. It's not impossible, though, and a carefully planned strategy can make all the difference in helping you save. Here are a few suggestions from our real estate agents to help you save up a down payment.

• Figure Out Your Goal
  If you think you have to save a full 20 percent to qualify for a mortgage, that may be making your home buying dreams seem less attainable than they actually are. In truth, the biggest difference not having 20 percent will make is that you'll have to pay an additional amount for private mortgage insurance. But it's still possible to buy a home with as little as 3 percent down. Figure out how much that will be, and don't forget to add another 3 to 6 percent to cover your closing costs. That gives you a minimum, and probably much more doable, goal to strive for as you save.
  
  
• Pay Down Your Debt
  If you're still making payments every month on your debt, it'll make it difficult to put aside money for savings, so focus first on paying down that debt as much as possible. Pay off small amounts first, just to minimize the number of payments you have to make each month, and then prioritize paying off the debts with the highest interest rates. If you can't pay it all off, you might be able to refinance and cut down your payments that way, helping you to funnel more money into savings.
  
  
• Cut Unnecessary Spending
  Now for the hard part! The best way to save money is, of course, to spend less. This means going through your monthly budget and spending records with a fine-toothed comb and reducing or eliminating the amount you spend on unnecessary stuff. You can save a lot by cutting the cable and switching to Netflix, and cooking at home, so you're not spending a lot on eating out and takeout. It's not going to seem like big savings at first, but over time it'll add up. If you need reminders of why you're saving, keep pictures of your favorite Richmond homes for sale posted where they can help you make good decisions, such as in the kitchen, to help motivate you to cook.
  
  
• Save Any Extra Money
  If you get a bonus at work or a tax refund, for example, put that money away as soon as you get it. This keeps you from spending it and adds a significant amount all at once to your savings account. You can also find some deliberate ways to bring in extra money, such as selling off possessions you no longer need or picking up a side hustle, and stash that in savings as well.
  
  
• Automate Your Savings
  Another tactic for making sure you make good decisions is to automate your savings. Set your accounts up to automatically transfer a certain amount of each paycheck into savings, for example. Never seeing that money in your account in the first place can help keep you from dipping into it, whether intentionally or accidentally.

As you save for your down payment, don't forget that there are programs to help reduce the down payment burden for first-time homebuyers. For more information about down payments or questions about buying your first home, contact us today.