Numerous people each year plan to save up to put a down payment on a new house, but one situation or emergency could detract homebuyers from getting their homes. Even though the job market is recovering and the housing market is much stronger than just a few years ago, people are still having trouble saving for that first big down payment on a new home.
If you have found yourself in this situation, you're not alone. However, here are a few tips to follow to help you save toward a down payment and get you one step closer to owning a new home:
1. Set up automatic payments
It's hard to manage finances, let alone save enough for a large down payment on a home. However, automatic payments into a savings account to build a healthy nest egg could do just the trick, Zillow recommended. While it might be the oldest trick in the book, it works for a lot of people. Saving for a down payment could be achieved by cutting your income by 2 percent - enough to barely notice - and stashing the extra funds into a savings account.
You can talk to your payroll department or one of our bank tellers to set up automatic payments.
2. Penny pinch where necessary
Most people discover they spend hundreds of dollars a year on coffee, soft drinks during lunch or other items that could be considered luxuries. Instead of spending money on coffee, breakfast and lunch every day, try packing meals from home. According to The Washington Post, eliminating your daily coffee visits could save roughly $1,000 annually, and making your own lunch each day could save another $2,600.
Getting rid of the small expenses tends to add up much quicker than you'd expect.
3. Put all extra cash toward a down payment
It's one of the hardest things to do, but when you come across a large chunk of cash, you need to put it in the down payment nest egg. According to USA Today, if you receive a large tax refund, it might be tempting to spend just a little, but instead, you should immediately put the money in your designated savings account.
If you happen to sell furniture, old bicycles, clothes or tools, put everything toward the home. Any extra cash will get you one step closer to your own home.
4. Avoid major purchases
When you're saving for a down payment for a home, it's easy to get sidetracked when you need a new car, updated clothes for a new job or money for a vacation. The best thing you can do is to avoid making all of these major purchases.
Keep the car that might be falling apart and avoid any vacations that will ultimately eat into your savings.
5. Get help from others
Another way to save money for your big down payment is to tell friends and family that you need the money and anything will do. According to the National Association of Realtors, 26 percent of first-time homebuyers received help from friends or family in 2013 when purchasing their homes.
No matter the situation, you should contact one of our helpful bankers to get you on the right track toward saving for a home.
For more information about smart ways to manage your finances, contact Landmark Bank.
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