Homeownership is a goal for many of us, and saving enough money for the down payment can be a high hurdle. Here are three ways you can begin to budget for your down payment and future home.
1.Bonus Plan
Set aside your bonuses, tax returns, and any unexpected earnings year over year. As soon as your earnings are deposited, transfer them to a high-yield savings account that remains untouched until you reach your down payment goal.
2.Automatic Transfer Plan
Bump up an automatic deposit to a designated savings account and calculate the number of months it will take you to get to goal. For example, if your goal for a down payment is $35,000, and you can comfortably contribute $600 from each of your paychecks, it will take you approximately 30 months or 2.5 years to save for your home down payment.
3.Certificate of Deposit (CD) or Money Market Plan
Deposit savings into a CD or Money Market account. Overtime, those savings will grow without guidance (dependent on the product’s term length and interest rate). Know there are minimum deposit criteria and withdrawal restrictions on these saving solutions. Sometimes financial institutions offer ‘No Penalty CDs’, like BCU. Learn more.
While you save for your home down payment, it’s important you continue contributing to an Emergency Savings Fund, too; That way you are not relying on your down payment savings in the case of an emergency.
Saving for a home is no easy feat. Ultimately, the outcome depends on your commitment to a savings plan. If you need assistance crafting your plan, talk to a Certified Financial Coach for free or visit homebuying solutions provided by a Credit Union committed to you financial well-being. We’re here to help you on the journey to homeownership!
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