Buying a new home is an amazing feat, especially if it’s your first time. It’s a true accomplishment and feels like you are unlocking another level of adulthood that you never thought possible. If you’re just starting the process, there is a lot to do and think about. The most important question you need to ask yourself is how you will gather enough money for your downpayment. If you want information on how to save for your first mortgage, follow along.
Before you can think about saving, you need to decrease your expenses. You have to sit down with a piece of paper in hand and write down every bill you have during the month. Make sure you calculate how much each bill is and how often you have to pay them. Then evaluate whether or not you can live without that bill or if there’s a possibility that you can negotiate it down. Some bills are fixed and can’t be lowered, but I’m willing to bet a few are. Pay off that cellphone your using, switch to a cheaper cable and internet package, and pay off those credit card bills if you have the means. Not only will that free up money to save towards your mortgage, but it will also lower your debt to income ratio.
Open A Savings Account
Now that you have freed up some cash, it’s time to start stashing it away. The easiest way to do this is with a savings account. I recommend opening a savings account, not with your regular bank. Once the account is open, pick a dollar amount you are comfortable with and make automatic regular weekly, biweekly, or monthly drafts into that account, then set and forget. You can periodically check the account to see the balance as it rises and mark whether you are getting closer to your goals.
When I was looking to save on my first home, I opened an Acorns investment account. It rounded up the change on all of my transactions attached to the connected debit and credit accounts. In under a year, I had close to $5000 ready to go. A similar strategy can and will work for you.
Set A Goal, Stick To It
Goal setting is very important and should even go before setting up your bank account. To set goals, you need to know what you are looking at in terms of prospective down payments. It’s ok to talk with a lender before starting your journey looking for your new home. They will be able to give you an idea of what you can afford and what your down payment would likely look like. Use that prediction as a guide in how you should be saving. Update that goal as you see fit and celebrate when you reach your milestones along the way. It’s the best way to keep you motivated during this process.
For more information on how to save for your first mortgage, follow the posted video.