Are you thinking about ditching the rental and owning your own home in Albuquerque? An important component of becoming a homeowner is the down payment. When you want to buy a home, saving for a down payment is likely to be the biggest obstacle.
Down payments are the cash you put down when making a large purchase. You would need $35,000 in cash to buy a $350,000 house with a 10% down payment.
Ultimately, your mortgage lender will provide the rest of the money to buy the home, and you will repay your lender over time. Down payments are generally required by lenders, with a few exceptions, such as VA loans.
Putting down 20% is recommended if you're buying a house, but that can be a lot of money.
What can you do if you live paycheck to paycheck? While it may be possible, you may also need to change your routine.
Take the First Step
Although it might seem impossible to save money when you're barely making ends meet, make one first step towards your goal. Taking that small step is the best way to begin, even if it seems symbolic.
Start by opening a savings account that will be used exclusively for the down payment. It will accrue interest over time, which will help.
Create a Budget
It may be that you are living paycheck to paycheck, but that does not have to be the case.
When you look at what's going out versus what's coming in, you may find that you can still save some money even with your current income.
If you are not being honest with yourself about your income and spending, you might not realize how much you are spending on unnecessary items. Nevertheless, being honest is worthwhile.
Include in your budget the amount that you will set aside every week or month for your down payment.
Even small contributions do add up over time if you’re consistent and patient.
Many financial professionals recommend following the 50/30/20 rule when creating your budget. Rent, for example, would take up 50% of your income. A third of the budget goes toward lifestyle expenses such as eating out. Savings or debt repayment should account for the other 20%.
Cut Out Subscriptions
Regularly evaluating your subscription fees and cutting them out is one of the best things you can do for your finances. Despite the simple concept, the average person in the United States spends $237 a month on subscriptions. It's a lot of money that could be used somewhere else.
Go Over Every Bill Carefully
Because your income is relatively low in comparison to your expenses, you should go through every single bill and transaction carefully.
There are several reasons for this.
The first thing you need to do is make sure you aren't paying for mistakes. You may also be able to find cheaper options. It may be possible to negotiate a lower interest rate on your credit cards if you make on-time payments in the past, or you might be able to get discounted car insurance rates if you are a good driver.
If you know where to look and are willing to ask, you can save money on your bills.
Add Income
As a last step, add extra income to your life once your budget is in order. It can be done in so many ways. Perhaps you deliver groceries or work for a rideshare service when you are not working your full-time job.
Adding another source of income puts you that much closer to your down payment, regardless of what it is.
Your secondary income should go directly into your down payment savings account so you won't be tempted to spend it elsewhere.
As you can see, with a few adjustments in your life, you can find the money you need to save for a down payment on your next home in Albuquerque.
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