Saving for a down payment on a house can feel like a grueling and never-ending process. Fortunately, there are ways you can stay inspired and hopeful while stashing away money toward your final goal.
Before you dive into saving for a down payment, USA Today indicated the importance of ensuring you truly can afford to purchase a home. Make sure you know how much you need to save for not only a down payment, but additional expenses, including:
- Private mortgage insurance
- Closing costs
If you can afford a home, follow these motivational techniques to continue building your down payment fund:
Make a second income...fun
You've heard it before, to expedite the process of saving for a new home, you can take on a second job. However, consider disguising work as play. According to Zillow, you might want to dabble in freelance work. There are websites available that connect freelancers with people who need talented writers, transcribers and designers to grow their operations. This makes finding another income easy.
Another way you can make an additional job fun is by turning your favorite hobby into a service or product consumers can also enjoy. Whether you like crafting, cutting hair, writing or photography, market yourself and use your passions to fuel your down payment fund.
According to Coldwell Banker, one way you can alleviate the stresses you might be feeling while saving for a down payment is by looking for help. Government-sponsored enterprises, such as Freddie Mac, Fannie Mae or loans through the Federal Housing Administration, offer lower down payment options for qualified borrowers. First-time homebuyers and low- to medium-income buyers can apply for these types of mortgages and move a step closer toward homeownership without the hassle of saving a 20 percent down payment. In fact, there are down payment options as low as 3 percent.
However, if you are interested in these options, you must factor in the additional cost associated with taking out a loan such as this. Typically, lower down payments translate into additional fees. To protect themselves, lenders will usually have a borrower pay for primary mortgage insurance until they have build 20 percent equity in a home.
Celebrate reaching goals
Throughout the saving process, it's important you continue to reward yourself along the way, according to Zillow. Because saving up all that money can be stressful, you should treat yourself each time you reach a specific goal or milestone.
For example, if you plan to save $30,000 for a down payment, consider going out to a nice dinner for each $5,000 interval. It will keep you motivated as you continue to funnel extra funds into your savings account for the down payment.
Remind yourself why you're saving
When you cut out the luxuries in life to save for a new home, you can quickly forget why you decided to do it in the first place. Have a plan to ensure you remember exactly why you want to become a homeowner.
Consider writing down reasons why investing in a new home is so important to you. Place the list somewhere you can see it every day, and use it to motivate your progress.
Another way to inspire you to continue saving is to head to a couple open houses or showings. Seeing what's out there and on the market right now can excite you for what is to come.
When saving up for a down payment on a home, it is easy for you to become distracted and lose motivation. However, by knowing how to keep chugging along, you can ensure you'll be a homeowner in no time.