Saving for your first home can feel like a daunting task. Unlike saving for retirement, you can’t just slowly set aside money, trusting and praying that you’ll have enough when it’s time to stop punching the time clock. When it comes to buying a home and saving for a down payment, the money saving tips look a little bit different:
1. How Much Do You Need: The first step in saving for a down payment is figuring out
exactly how much you’ll need. Meet with a mortgage lender to prequalify. The rule of
thumb is your housing expense shouldn’t exceed 28% of your stable monthly income.
Once you figure that out, you can use that figure to determine the figure for your down
payment: usually 20%.
2. Determine Timeframe: Now that you know how much you need, it’s time to figure out
how long you have to save for it. Obviously, the sooner you plan to purchase your home,
the less time you have to build up that savings, so prepare to save more per year.
3. How to Save: Since your money needs to be available in a certain time frame for a
specific purpose, this is not the right time to put money into risky though potentially high
return vehicles such as stocks and real estate investments. Quite the opposite, in fact. You
should save our money in safe areas such as a savings account or certificate of deposit.
4. Budget: Make room in your monthly budget—or make a budget—so you know what you spend and where you can spend less in order to save more. Figuring this out may also
reveal that you need to add additional income in the form of a side hustle or second job.
This is also a great time to set up an automatic payroll savings plan. This means, like
your 401(K) contributions, a certain amount of your regular pay goes directly into a
savings account. Additionally, if you inherit money or receive a generous financial gift
put that money directly into your down payment savings account and you will fast
forward the process.
5. Plan for Issues: Life happens, so if in the middle of saving for your first home, you
experience a medical issue or need major car repairs, make sure that you keep a well-
stocked emergency fund.
While saving for your first home or even buying a second or third home can seem daunting and overwhelming, you don’t have to do it alone. If you need help with understanding real estate law or negotiating buyer or seller contracts, contacting a Florida Real Estate Attorney is recommended, and Quinones Law can help. One of the most exciting experiences of your life should not be fraught with worry and anxiety, contact us today to have a real estate attorney in your corner. Call us today at 561-340-1429