Wouldn’t it be cool if we could all sit on Santa’s lap and ask for a house for Christmas?
We are talking about a real cozy home, not just a paper dollhouse! While Santa’s elves are busy building toys galore for all the children worldwide, we can help you at RE/MAX Capitol Properties with getting your finances ready to have a down payment for a home.
Steve Prescott is our managing broker and owner at RE/MAX Capitol Properties. He is also an Endorsed Local Provider (ELP) for Dave Ramsey’s trusted financial program. To save up for your first home, here are some essential tips you can begin implementing today!
- Start by building up your emergency savings to cover three to six months of expenses. Achieve this by setting up a financial goal for each month.
- Set aside your goal down payment amount for your home. Get prequalified to know what value of mortgage you can obtain. Then plan to pay 20% in your down payment to be able to bypass the mortgage insurance. If this is not feasible, then look to do 10%. Then divide this total by the number of months you plan to save up funds. We recommend that you give yourself a couple of years (2-3 years on average).
- Reappropriate funds to concentrate funds on debts by pressing pause on retirement if you are already investing for this. Dave Ramsey recommends investing 15% of your household income in retirement once your emergency savings are in place. In this instance, however, you are getting situated to qualify for your home. Your debt-to-income ratio has to be healthy when borrowing.
- Add to your cashflow with a second job. You can always build up your savings quickly by picking up side jobs. This can help when trying to achieve your financial goals quickly. This could be anything from Grubhub to Uber to retail, and soon you will get in an excellent position to buy a home.
Let’s put this math to practice. If monthly expenses are $2,000, you would want in your emergency savings $6,000 to $12,000. Once this is in place, you can then start to save for your down payment. If you qualify for a home that is then $200,000 then you would want to put down $40k. If you want to achieve this in 2 years, you would need to place in your savings $1,600+ a month to achieve your goal. Pretty doable once you break it down and keep track of your spending. Want further guidance? Give Steve a call at (307) 630-9342.