The more money you put down on your home, the less accumulative interest you will pay in the long run, and the faster you will pay off your home. The goal is to eliminate monthly rent and mortgage sooner rather than later. And, putting down even a few thousand more won’t be as hard as you think. Here’s how to save for your house down payment.
Set A Buying Budget And Timeframe
The first thing you want to determine is when you plan to purchase your first home and how much you plan to spend on your home. Start by looking at the median home buying prices in your local area, which for Loudoun County is currently around $470,000. Then, talk with your financial advisor regarding what fits into your budget. Next, you must determine the percentage you plan on putting down. You will be requried to put down between 0% to 20%, the more the better. At 20% down or more:
- Your mortgage will be lower.
- Your equity will build faster.
- Your monthly payment will be lower.
- You can potentially pay your home off many years sooner.
Setting Money Aside
Once you determine how much you must save, you need to map out a plan of how to get there faster. Here are a few ideas:
- Automatically withdraw a set dollar amount from each paycheck into your down payment savings account.
- Place all unexpected money or financial increases into your down payment account: bonuses, annual raise, gifted cash from family, tax refund, etc.
- Make more money: garage sale, freelancing, second job, etc.
- Save more money: renegotiate your smartphone plan, bundle cable and internet, switch to a new utility provider, shop in bulk, move into a cheaper rental unit, replace your daily café coffee with at-home brew, etc.
Consider A Starter Home
There are many financial strategies to consider when buying your first home, one of which is to invest in a starter home. This is a home ideal for singles, couples, or small families—that you don’t plan on living in long-term. Starter homes have many benefits, including that they are on the lower end of the NoVA buying range, they gain equity faster, you can save for your down payment faster, and they make excellent investment properties to rent out when you are finally ready to upgrade your home. This could include cottages, 1 and 2-bedroom homes, duplexes, and even alternative homes.
When your house down payment is in the bank and you are ready to begin house hunting for your first NoVA home, the team at Jerry Sardone Realty is here to assist you. We are local real estate experts, and we guide you through every step of buying a home. Reach out today to learn more!