Are you ready for home ownership? The prospect of owning your own house or apartment is an exciting one, but with any financial transaction this large there are some things to consider. The first is your down payment – that is, the initial payment you’ll put against the cost of the house to reduce the amount that you’re borrowing in a mortgage. Let’s have a look at four habits that will help you to get your down payment saved up faster.
Build (And Stick To!) A Reasonable Budget
The first and most obvious tip is to stick to a reasonable budget. Determine how much you have coming in and going out of your bank accounts and credit cards each month. Group everything into areas like ‘food,’ ‘utilities,’ ‘dining out,’ ‘entertainment’ and more. Then, reduce each area to a reasonable amount and avoid any overspending.
Figure Out Your ‘Latte Factor’ And Eliminate It
If you’re unfamiliar with the term, a ‘latte factor’ is that one consistent purchase that you make each day which, over time, drains your bank account. For example, if you spend $5 each day on your coffee habit that adds up to almost $2,000 per year in unnecessary costs. Pay close attention to your spending habits and try to eliminate anything that you can.
Make Automatic Payments To A Down Payment Fund
If you’re working a stable job and have regular pay periods, you may want to explore setting up a separate savings account for your down payment. Once you have this account opened, set up automatic deposits from your regular bank account after each pay day. This limits your ability to spend your cash while building up your down payment fund automatically.
Don’t Carry Credit That You Don’t Need
Finally, try not to carry credit that you aren’t going to use. This includes department store credit cards, extra bank credit cards or lines of credit. While it won’t necessarily harm your credit score to have available credit, if you do have it you’re far more likely to use it than if you don’t. You’ll need to be disciplined to save up your down payment. So don’t bother with extra credit that may be too tempting to resist using.
These are just a few of the smart money habits that will help you get your mortgage down payment saved up as quickly as possible. When you’re ready to discuss mortgage financing for your new home, contact our your trusted mortgage professional.
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About the Author:
Babak Moghaddam graduated from University of Southern California in 1985. He entered the mortgage industry as a compliance auditor at the Bank of New York in 1986 and completed his masters in Business Administration two years later. After seventeen years in the traditional mortgage banking world Babak finally transformed this vision into his own practice in 2002 when he formed Charter Pacific Lending Corp, a mortgage company that has provided over $900 Million in residential real estate loans throughout Southern California. Babak and his team do things a little differently than other mortgage providers. They work as financial advisors, because they have come to realize that a mortgage is a very powerful financial tool. And just like any other financial tool, it should be managed as part of the overall financial management plan to reach every home owner’s long and short-term financial goals much faster. You can contact Babak for a free consultation and strategy session at (800) 322-1217 X103.