Can I Really Save Enough for a Down Payment?

Saving enough for a down payment on a home is as possible as you make it.  It will take a great deal of penny pinching and determination, but with the steps listed below from CNNMoney, you can make it.

  1. Determine your price and possibilities.  Make sure that you are looking at a house within reason of your income, and expenses.  With a steady income, the lender will normally set the monthly payment to be about 28% of your pre-tax income monthly.  A great resource for finding what is a manageable amount you can spend on your dream home can be found by using this home buying calculator, provided by CNNMoney.  (Be sure to note that this calculator does not include all expenses/details of your financial life.)
  2. Set a plan. Once you have picked your price and determined what is going to be a reasonable home for you and your financial situation, then set your plan in place.  Without putting a plan in place and determining exactly what it will take in order to make it to your dream mansion, it will stay a dream only!  Once you have your down payment amount, set a date for when you want to have the proper amount saved, and hold your ground.  See what it takes, by using this savings calculator.
  3. There are other ways to save.  The standard method of taking a certain amount of money, and putting it aside into a savings account is a great way of meeting you goal.  However, the process of saving can be sped up.  If you have a couple of years before buying a home, you can  invest a part of your money into stocks, and watch the interest grow with your money. Investing in stocks is a lot riskier than keeping your money safe in a savings account, but can also be a great way to increase your savings quicker.
  4. Consider less than 20% down.  In a really tight pinch, sometimes it might be necessary to consider a less-than-ideal down payment of less than 20%.  It will increase your monthly mortgage payments, but it can be done by using FHA programs.

Having a dream home will stay just a dream unless you set in place a properly prepared plan.  Don’t give up hope, and prepare now, so that when you are ready to get the process started you can use to get the right agent for you and your family.