Tips to Save for a Down Payment on a New Home
Homeownership can be a rewarding journey. Of the many steps involved, perhaps one of the initial steps, making the down payment, is the most challenging. The standard, recommended down payment for a home purchase is twenty percent.
Preparing for a sizable down payment on your new home can save you a lot of money in the long run. The more money you can put into a down payment, the less you have to finance. In addition to reducing the interest you would pay through your mortgage, making a hefty down payment may lead to a more favorable rate.
Below are five tips on how to start building your down payment today, so you can buy the home of your dreams tomorrow:
- Commit to basic budgeting. Build your budget with your down payment goal in mind. Cut back on unnecessary expenses and put as much as you can into a savings account.
- Reduce credit card and high interest debt. Credit card debt, as well as high interest loans, can drain your bank account making it harder for you to save money. Start by paying down the debt with the highest interest rate until you’ve eliminated or substantially reduced your debt.
- Save your extra money. If you received a bonus, raise or sizable tax refund recently, deposit that influx of cash into a high-yield savings account.
- Avoid investing large amounts of money. You may be tempted to invest the money you've saved in the hopes of maximizing returns; however, in the event of an economic downturn, doing so could deplete your savings. Instead, keep your hard-earned funds in your savings account.
- Review local assistance options. Many local government agencies offer support to low-income and first-time homebuyers. Look for options that can help you reach your financial goals, such as grants, tax credits and loans. A great place to begin is the U.S. Department of Housing and Urban Development website.
To learn more about the homebuying process, visit trustmark.com/mortgage or contact your local Trustmark mortgage expert today!