How to Save for a Down Payment on a House

It is important, and often necessary, to have a nice sized down payment saved up to buy your first home. Gone are the days of 100% financing for everyone, lenders are now requiring down payments.

It is in your best interest to try and put 20% down, not only to keep your payment down, but you will likely receive a lower interest rate and save money on mortgage insurance. A little bit of dicipline, and you can save for that down payment on a home, no matter how tight your budget.

Difficulty: Moderate

Instructions

Things You'll Need:

• Piggy Bank
• Bank Account
• Ledger

1. Open a savings account with $100. If you have to go without eating out, drinking pop, going to the movies, or any other luxury, do it. Starting with a good round number of $100 will get you off to a great start.

2. Set up weekly deposits into the account directly from your paycheck or checking account. A minimum of $20 will get you started. If you are able, do $25 or $30.

3. Save all your change. When you purchase something for $9.10, pay with a $10.00 bill and stash the .90 in a piggy bank. On average, those who do this save an extra $30 a month, may not seem like a whole lot, however when saving for a down payment on a home, every dollar counts.

4. Hold a garage sale or yard sale. Spice it up and set up a bake sale too. Spend a few dollars to gain some good advertising and decorate some highly visible signs. Shoot for a profit of $250.

5. Add your windfalls to the savings account. Windfalls can be tax returns, birthday gifts, or work related bonuses. Shoot for $1000 a year in windfalls. If you don't foresee any, look for some. Do something extra to gain it.

6. Cut back to the bare bones. Do you really need cable or satellite tv? Try reading instead! Can you cut back on Internet access? Visit the library and use their computers. It may seem like big sacrifices, but in the long run, it will be worth it! Cut backs can save you $500 a year!

7. Add up your totals. In one year's time, you should have accumulated $3250 plus interest. In two years, you will have $6500, plus interest saved.

Tips & Warnings

• Work on your credit report during this year of saving. The better your credit score, the better interest rate you can achieve.
• Don't give in to temptation- remember what the money you are saving is for.

[bellerose]

on 8/5/2009 Great workable tips for how to save for a down payment on a house--5*