Sunday, June 20, 2010

How You Can Save Up Enough For the Downpayment to Your New Home

The downpayment you'll make on your new home would be the biggest out-of-pocket expense you'll need to make when buying real estate property. When people look at it in terms of how big the amount is, they sometimes feel discouraged because the truth is that it's really hard to come up with that amount of money. Let's say for example you want to buy Punta Gorda real estate and as you look through Punta Gorda homes for sale you find out that the normal price range for houses with specifications that you want in the area is about $1,000,000. The traditional amount that you need to prepare is 20% of the list price, so with that base amount in mind, the downpayment could be $200,000. You can increase the downpayment if you want, in order to decrease the monthly amortization of the mortgage and the amount you pay for the interest. However, looking at $200,000 could be a surprise to you. How can you come up with such a huge sum of money?

That huge sum of money isn't something you really need to come up with in a matter of months. Saving for the downpayment is a process that happens over a long period of time. If you do it right and if you really make the effort to get your finances in order, you'll probably see that not only will you be able to save up enough for downpayment but you'll be spending within your means, developing healthy credit, and improving your credit score. Here are a few tips to help you save money for your downpayment.

1. Save first, spend the rest. - Many people spend their income first and then put whatever is left into their savings. This has proven to be quite ineffective because as long as you can see and access your money, you do tend to find ways to spend it. Depending on your situation, you can save 10% and spend 90% of your income. This may seem small but the truth is that as long as you're consistent with your savings, you'll get there eventually. If your finances improve in the future, you can increase the ratio to 20% to 80% or even 30% to 70%.

2. Set up a savings account and save as if you're already paying for the mortgage of your future house. Many people find this effective because their money is safely saved away in an account separate from the one they access daily for their day-to-day needs. Thinking that you're paying off a mortgage already not only helps you save more money but also instills a habit of saving in you as early as now.

3. Get a second job and put your income from that job directly into your savings. Even if you have two jobs, make do by living on only one salary. After all, you have done that before. You'll be surprised at how much money you save this way.

4. Pay off your credit card debts. - Much of your income probably goes to credit card debts. Pay them off or lower them significantly before you start saving so that you can put more money to your downpayment savings fund.

Nova Berry is a freelance writer who specializes in writing content about real estate, business and investment. Check out great Punta Gorda homes for sale and Punta Gorda real estate listings.

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Tags: punta gorda homes for sale, punta gorda real estate, punta gorda mls

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