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How to Save for a Down Payment

For first-time homebuyers, it can be difficult to save enough money for a down payment. Purchasing a house is expensive, especially as home’s come with their own set of additional expenses, such as utilities, HOAs, insurance, etc.

When saving for a down payment, it is important to factor in those other expenses in order to know just how much you should save to avoid being financially ill-prepared for your first home.

Saving can sometimes feel like an uphill battle, as the process can feel like it will take months and years to complete. However, with a few tips on how to save properly, you can set aside quite a bit quickly.

Though it might seem obvious, one of the best ways to start saving is to start cutting back on the unnecessary purchases. Instead of purchasing your meals everyday, which can add up quickly, consider bringing your lunch with you to work. Similarly, cut back on the amount of coffee you purchase at coffee shops, for you can save hundreds each month.

In cutting back on your household expenses, consider what you can and cannot live without. For instance, if you cannot live without access to your favorite sports networks, consider switching to a new cable or satellite provider that offers you the same channels for a fraction of the cost, like Direct TV, which offers great deals on sports bundles. Get the NFL Sunday Ticket here.

If you are serious about saving for a home, look to downsize in your current property temporarily in order to save more quickly. Whether that is moving from a condo to an apartment, or even having to make back home temporarily, downsizing is an effective way to save money. If downsizing is not an option, consider renting out a spare room for a while in order to collect rent and make some added income.

If you are a couple looking to save for a home, try living off of one income for a while, putting the second income immediately into a savings account. While you might feel strapped for a while, this can lead to saving for a down payment more quickly. If you can’t afford to live off of one income, try living off as little income as you possibly can, saving the rest in your home fund.

If you have a hobby that could make money, consider trying to start a side business. All income can be saved directly into your home fund, and if the business takes off, you could reach your desired amount before you know it. Websites like Etsy are great avenues to getting the word out about your business, as the site is dedicated to selling handmade goods.

Consider forcing savings by having a set amount automatically set aside each month in a savings account. This can ensure that you are not tempted to spend the money on other things, for it is already saved.

These tips can help you save quickly for your down payment.

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