When first-time home buyers are serious about buying a home, they often have to readjust their current budgets
Chicago, IL (PRWEB) January 13, 2015
While there are plenty of scary parts about the home buying process that can hold back potential first-time home buyers from purchasing a property, The Federal Savings Bank knows that one of the most frightening is saving up for a down payment. While a 20 percent down payment is no longer considered the gold standard, some home buyers may still struggle with coming up with the funds to buy their dream homes.
However, this process doesn't have to be as worrisome as they think if they keep the following tips in mind for saving for a down payment:
1. Request automatic transfers
Although it might seem like buying a home is a long time away, it's important to begin saving as soon as possible. While having a savings account is a good start, signing up for automatic checking-to-savings transfers can help accumulate these funds faster, according to realtor.com. If one already has a direct deposit set up for their paycheck into a checking account, contact the bank and transfer a percentage of the money from the paycheck to account savings based on how much of a down payment is needed.
2. Lower the cost of housing
Before first-time home buyers close on their homes, they could try to save money by either downsizing their houses or lowering their rental costs. Younger first-time home buyers could live with their parents with a short period to save on rent. For those who currently live in rental homes or apartments, they could also reduce their rental payments by negotiating for lower rates.
3. Reduce spending
When first-time home buyers are serious about buying a home, they often have to readjust their current budgets to move money around and build up their savings accounts. First-time home buyers could look at their budgets and see where they can cut their spending. Buyers could use online budgeting and money management tools to monitor their cash flows and spending habits to prevent overpaying for certain budget categories like entertainment and shopping each month and instead put that money into their savings.
4. Deposit extra money into savings
Whether one takes up a second job, does freelance work on the side or find themselves with extra cash at the end of the month, consider depositing this money into a savings account toward a down payment, according to realtor.com. By taking on more work, one can be closer to saving for an ideal home. One may also decide to turn a tax return into a higher down payment instead of spending it right away.
5. Sell old or unused items
If one plans to move anyway, now might be a good time to look at personal belongings and see what one can part with. Selling old items or collectibles could save on space in the moving truck and give some extra cash to use for a down payment.
Contact The Federal Savings Bank, a veteran owned bank, to learn more about mortgages.