When considering buying a home, the down payment you put upfront plays a major role in your future housing expenses. According to the Consumer Financial Protection Bureau, the amount you save can greatly influence your interest rate, monthly housing payment and also your need for mortgage insurance. As you prepare for the home buying process, review these six tips to help you cut the extra costs and save a substantial amount for your down payment:
Develop a budget & timeline. Start by determining 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.
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.
Shop around to reduce major monthly expenses. It’s a good idea to check rates for your car insurance, renter’s insurance, health insurance, 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.
Monitor your spending. With online banking, keeping an eye on your spending is easier than ever. Track where most of 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.
Look into state and local home-buying programs. Many states, counties and local governments operate programs for first-time homebuyers. Some programs offer housing discounts, while others provide down payment loans or grants.
Celebrate savings milestones. Saving enough for a down payment can be daunting. To avoid getting discouraged, 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 throughout the process.
Affordable Housing Foundation Grants - up to $7,500 The Marquette Bank Affordable Housing Foundation Grant is offered by Marquette Bank and provides grants of $2,000, $4,500 or $7,500, depending on the census tract you live in currently in Cook, Will, or Dupage. You must be a first-time homebuyer and your total household income must be less than 80% of the area’s median income for your county.
Neighborhood banks like Marquette have information about all programs and grants that are available to you. They will help you evaluate which ones are suited to your situation and then explain things clearly. Marquette can help you review your credit report, fix problems, get your financial documents in order and help you get pre-approved to start on your way to home ownership. Call us today to speak with one of our Mortgage Specialists at 1-708-364-2525 or email us at firstname.lastname@example.org to get started.
Reproduced with express permission from American Bankers Association Foundation – American Housing Resources campaign materials.