The scariest thing you will ever do is save money for your down payment. It’s quite a chunk of money we’re talking about, and it can be super intimidating. How do you even save up for something like that? Well, let’s look at some methods to save money for a mortgage down payment.
The very first thing you need to do when you’re planning on starting to save is to get rid of your debt. It doesn’t make sense to try to save money when you have so much of it going out every month.
Considering the interest rate for mortgages and the interest for whatever loan you may already have, you’ll figure out that it’s a lot of money to pay. So, it makes more sense to pay off any other loans you may have taken out before, so you can effectively save up, instead of spending all your money on interest charges.
This may go without saying, but you’re going to have to hit the pause button on luxuries, at least for a while, until you save up for your mortgage down payment and differentiate between the types of mortgage loans. There are a lot of unnecessary expenses you may be incurring, including monthly subscriptions, shopping trips, perhaps some frequent travel, spa weekends, etc.
The trick here is a) restraint & self-control and b) asking yourself what you’d rather have more: a nice house, or the latest pair of designer sneakers? Hopefully, the answer is obvious and that helps you keep your goal in mind.
A lot of people make sacrifices while saving up for a mortgage down payment, and that can include your living arrangements. You may have sworn you will never go back to live with your parents, but if it’s temporary and you save all that rent money…you may be persuaded.
If that is absolutely out of the question, and downgrading is also not possible, you may want to look into what other options you have, in terms of loans and down payment amounts. Mortgage loan providers such as Magnolia Bank, JG Wentworth, NBKC Bank, Lending Tree, or New American Funding can help you with all the information you may need. They can help with understanding mortgages, answer frequently asked questions, like “how long are mortgages?”, and explain things like pre approved mortgages, current mortgage rates, etc.
Sometimes, you just have to push yourself hard for a bit in order to reach an important goal. If you’ve got the time and the ability to do it, taking on some overtime at work may pay off in a very big way. Especially if you work weekend hours or holidays, you can get paid more, and you can put all that money towards your mortgage down payment.
This option is exhausting, but hopefully you’ll only have to do it for a short amount of time, until your savings pot starts looking better. It helps if you have a partner who is also contributing.
Similar to the previous option, many people choose to branch out during this time, taking on a second job or a side gig. Any activity that brings in additional income is great, although hopefully, it won’t take up a lot of your time.
You can do anything from picking up extra hours at a local supermarket or fast food chain to setting up an Etsy shop and selling some handmade work, to offering services like consulting or freelancing on an online platform. These last few options are especially good, because they’d allow you to make your own hours.
If your problem with saving up for a mortgage down payment isn’t that there isn’t enough money, but that you tend to spend it all, there are ways around that. First, and most importantly, you should set some money aside at the beginning of every single month, or whenever you get paid. If it’s gone from your account, you can’t spend it. You can also track your spending on an app, set up different mini budgets for each spending category (groceries, gas, rent, etc.), or employ other little tricks to keep you on track.
Saving up for your mortgage down payment can be hard, but it’s so worth it! Just think creatively and exercise self-restraint.