Barbara Livelsberger | Posted on Jul 01, 2017
The summer season and real estate market are heating up as evidenced by all the new For Sale signs in our local area. Yet, for many, saving enough money for a down payment --- typically between 5 to 20 percent of the home’s value --- is one of the biggest challenges facing aspiring homebuyers. For this reason, the American Bankers Association has outlined six tips to help consumers cut costs, start saving, and make their dream of homeownership a reality.
- Develop a budget and timeline. Start by determining how much you will need for a down payment. Create a budget and calculate how much you can realistically save each month to help gauge when you will 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 will be less likely to tap into it when you are tight on cash.
- Shop around to reduce major monthly expenses. It is 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 such as meals out or vacations 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. If you are thinking about purchasing a home in Adams County, you’re in luck. The Pennsylvania Interfaith Community Programs, Inc. and Adams County Housing Authority provide eligible homebuyers with low interest rate loans from $2,000 to $7,000 for their closing costs or down payment. Applicants must be first-time homebuyers and meet household income that is at or below the HUD low-to- moderate household income limits for Adams County. Learn more at www.pafirsttimehomebuyer.net/adams-county.
- Celebrate savings milestones. Saving enough money 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 out when every $5,000 is saved. This will help you stay motivated throughout the process.
Finally, establish an overall timeline to put each of these tips into action. Then, seek further assistance from your local bank when the time is right to get pre-qualified and, ultimately, purchase your first home. The American Bankers Association provides a variety of helpful resources for new and experienced homebuyers. Visit www.aba.com/consumers for additional information.