How to Save For a Mortgage Down Payment

How to Save For a Mortgage Down Payment

The allure of owning your home is enticing. The privacy to do as you please and the freedom to create the environment of your dreams take over our thoughts as we fork over the latest rent payment. If you think owning a home is impossible, think again. If you have decent credit and a stable job, it comes down to one thing – the down payment. The thing to remember about a home is that much of the cost of owning one lies outside of merely mortgage payments. Utilities could be more expensive than when you rented and suddenly repairs become your sole financial responsibility, so it is important to make sure you give enough of a down payment to ensure your monthly mortgage payments don’t make day-to-day living difficult.

Here are a few tips for saving up for that down payment.

Open a savings account.

 Opening a savings account might be the easiest step you can take to save up for your down payment. Most of us have checking accounts and opening a savings account with the same bank usually costs nothing. And most employers allow you to allocate a certain amount from your paycheck to be automatically deposited directly into your savings account. Direct deposit is such an easy method because you can set it in motion, forget about it for a year, and then come back and look at all you’ve saved. After you accrue a large enough amount, you can even consider a high-yield savings or money market account to grow your money faster.

Cut down on luxuries.

Before beginning any large-scale saving plan, you need to determine where you are spending your money – especially when it comes to non-essential items and activities. Print out a copy of your bank account activity for a full month and get to work! Create a spreadsheet and add up all of your essential expenses like your rent, utilities, gasoline, and groceries. Then subtract that number from the overall amount spent that month – that number is your disposable income. Now it’s time to analyze where you could potentially be saving for a down payment Anything that is a luxury can go. High cable bill? Choose Netflix, Hulu, or Amazon Prime instead. Is a lot of money going to eating out? Start cooking meals at home that can be reheated and eaten for multiple dinners and lunches.

Make extra money.  

An easy way to boost your savings pot is to take any opportunity to make extra money. Do you have extra time that you could spend working a part-time job? Do you have a skill that people would pay you to do freelance outside of your regular job? Put your name out there to your friends and family and see what you hear back. Are you crafty? Make an Etsy account and sell your handiwork. It’s also a good idea since you’ll be moving and probably purging some of your accumulated clutter, to go through your closets, attics, or storage units and see what you may have to sell. Make Craigslist and eBay a part-time job too!

Contact the Northrop Team

Once you feel comfortable with the amount of money you’ve saved, contact the Northrop Team to get you on the path to purchasing your first home

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