Before you can transition from renting to owning your home, you will need to have a substantial down payment, typically 5 to 20 percent of the home’s value. Busey suggests the following tips to help save:
1) Develop a budget & timeline. Determine how much you’ll need for a down payment. Create a budget and calculate how much you can realistically save each month—that will help you gauge when you’ll be ready to transition from renter to homeowner.
2) Establish a separate savings account. Set up a separate savings account exclusively for your down payment and make your monthly contributions automatic. By keeping this money separate, you’ll be less likely to tap into it when you’re tight on cash.
3) Shop around to reduce major monthly expenses. It’s a good idea to check rates for your car, renter’s and health insurance, as well as your cable, Internet or cell phone plan. There may be deals or promotions available that allow you to save hundreds of dollars by adjusting your contracts.
4) Monitor your spending. With online banking, keeping an eye on your spending is easier than ever. Track where your discretionary income is going. Identify areas where you could cut back (e.g. nice meals out, vacations, etc.) and instead put that money into savings.
5) Look into state and local home-buying programs. Generally, the longer you plan to live someplace, the more it makes sense to buy. Over time, you can build equity in your home. Carefully consider your current life and work situation and think about how long you want to stay in your new home.
6) Celebrate savings milestones. Saving enough for a down payment can be daunting. To stay motivated, break it up into smaller goals and reward yourself when you reach each one. If you need to save $30,000 total, consider treating yourself to a nice meal every $5,000 saved. This will help you stay motivated through the process.
Busey can help you figure out if you—and your finances—are truly prepared for homeownership. With extensive experience helping homebuyers, put your trust in our mortgage expertise. Visit one of our many convenient locations, call 1.800.67 | Busey or apply online at buseymortgage.com today.