It’s never too early to start saving for a home. It is a process that takes time, determination and patience. Whether buying a house is in your immediate future, setting aside money now will help ensure you are ready when the time comes. Generally, you want to save about 20 percent of the selling price, but the more you can save for a down payment, the lower your interest and monthly payments may be on your mortgage.
To start saving to buy a house, take a look at your current budget; are you putting money away into a savings account? How much are you saving each month, and what is it for? Consider how much room you have in your budget to set aside savings, and what you could possibly cut out to grow your savings even more.
Start a new account when saving for a down payment on a house
Opening a designated savings account can help you manage your budget when saving for a home. If you keep your savings in a specific account for a down payment, you may be more hesitant to withdraw funds for other purchases. You may also want to find out if banks in your area have a home buyer savings account. Since these accounts are designed to help when saving to buy a house, some have better interest rates than a standard account and may even offer you a bonus when you reach your goal or help you obtain a mortgage pre-approval quickly when you are ready to look at homes.
Setting up automatic deductions helps make saving for a home simpler
You might be surprised how much you can save when you have everything set up ahead of time. Automatic deductions take the everyday chore out of saving; making it easy to set aside the funds you need while staying within your budget. If you have a direct deposit set up for your paycheck, automatic deductions or transfers are even simpler. Inform your employer which accounts you want your paycheck deposited into and the amounts which should go to each, that way part of your paycheck goes right to your savings account. You can also, set up a recurring transfer from your checking account to your home buyer savings account the day after your paycheck is deposited each month. This allows you to set aside your savings for a home before you might be tempted to spend the money elsewhere. It will help you set up a steady method of saving for a down payment on a house and you can always raise or lower this deduction as your financial situation changes.
Calculate the savings you’ll need for a down payment on a house
Consider using a savings calculator tool to give you accurate results that may alter your buying deadline or the amount you’re setting aside each month. Even if it seems like the dream of owning a home is far away, you should start the process now. Research the price range for different types of homes in your area by looking at local real estate listings. This will help you calculate how much you need to save each month to make the down payment you’re aiming for. Then set up automatic transfers to your home buyer savings account and start saving for a down payment on a house today.