If you’re planning on buying a house, you’ve probably been thinking about how to save for the down payment. With the right financing, they can be very affordable. Here are some great tips to help you save for your down payment, earnest money, and closing costs.
Determine your savings goal
Before you begin saving, determine how much you may need. These days, a down payment is much lower than you may think! Our mortgage partner, Mortgage Center, offer’s many low-down payment options including FHA and Zero Down.
Typically, your home’s down payment is between 3% and 7% of the home’s value. Take a moment to make a rough estimation of what your down payment, closing costs, and earnest money may be.
Put a timeframe together
Now that you know how much you need to save, it’s time to put a plan together. For example, if you want to buy a home in 2 years, you should divide the total amount of your down payment by 104 (the number of weeks in 2 years). This way, you’ll know the exact amount you should be putting away each week.
It’s important to make sure this is realistic. If the amount you need to save is more than you’re comfortable with, you may want to reevaluate your timeframe.
There are many ways to save money, but here are some great tips to get you started:
- Make a dedicated savings account: Ask your credit union about setting up a side savings account. If you allow a portion of each paycheck to go into that account, you can save big without lifting a finger.
- Doublecheck your memberships and subscriptions: These days, it’s easy to pay for too many monthly subscriptions. If you find you’re paying for anything you rarely use, end it for now. You can always pick it up later.
- Set aside your tax return: Even if it’s just a small portion, it brings you closer to your goal!
- Have a garage sale: We all have things that gather dust. If you have enough of those items, try holding a garage sale to raise some extra cash. Alternatively, you can sell individual items online.
- Reduce your energy costs: Whether this means adjusting the temperature in your house, or finally addressing that drafty window in the front room – any small thing helps.
Check your progress
Mortgage Center has plenty of helpful financial calculators including the benefits of owning vs. renting and how much you may qualify for. Check them out at MortgageCenter.com/OURCU/calculators.
Give Mortgage Center a call at 800.353.4449 or visit MortgageCenter.com/OURCU to get in contact with one of their mortgage experts. They can help you determine how much money you may need and can even give you a free pre-approval when you’re ready.
Information as of February 2021
Equal Housing Lender
Mortgage Center NMLS# 282701
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