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How to Begin Saving Money for a Down Payment

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Buying a home is usually one of the largest purchases a person will make in their lifetime and a down payment is often seen as a hurdle to home ownership. While saving enough for the down payment and closing costs may seem daunting, with some strategizing, discipline and a little time, you can reach your savings goal quicker than you think. Here are some tips to help you get started.

  • Calculate how much home you can afford. In order to know how much you’ll need to save for a down payment, you’ll first need an idea of the price range you want to spend on your new home. Our online mortgage calculator can help you analyze your income and expenses to estimate a mortgage amount that may be right for you.

  • Set a goal for how much you want to save for a down payment and closing costs. Typical down payments range from three to 20 percent of a home’s sale price. Remember, the higher your down payment, the lower your monthly mortgage payment will be. A mortgage loan professional can help you understand options available to you for down payments and can provide closing costs estimates.

  • Set up a designated savings account. Whatever goal you’re saving towards, it’s always a good idea to separate the money you set aside for it from other funds. This helps ensure you don’t accidentally spend it on other expenses and you won’t be as tempted to dip in to that money if times become tight. Having a designated savings account also makes it easier to track your progress to help you stay motivated.

  • Automate your savings. Set up regular transfers to the savings account you have set up for your down payment. This makes it easier to stick to a schedule. If you arrange for money from each paycheck to go right into the account, you may never even miss the money you’re setting aside.

  • Track your progress. Watching your money grow closer and closer towards your goal is a great way to stay motivated. A simple spreadsheet can help you visualize how far you’ve come or you can go high-tech with a budgeting app such as Mint or Money Box.
Have questions about down payments, closing costs or the mortgage process? Capitol Federal’s loan professionals are here to help. Equal Housing Lender.

Do you have other tips on saving for a down payment and closing costs? Share them here!

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Categories: Strategies for Saving, Your Home
Tags: Home Mortgages

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