You Know It Don't Come Easy - Ringo Starr

It Don't Come Easy: Five Tips for Saving Your First Down Payment

As Ringo Starr once wrote, “It don't come easy.” He may have been talking about singing the blues, but the same words apply to saving a down payment when purchasing a home.

Saving for a down payment for your first home can feel like a difficult task, but it's one of the most rewarding goals to achieve as a first-time home buyer because it puts you so much closer to owning a home. Just as it is with so many aspects of buying a house, the real trick to saving a down payment is planning ahead.

Here is a list of five simple, effective tips to making saving for a down payment "easy".

1. Open a Savings Account
   There are so many ways to store, move, and spend money today that it's easy to forget just how important a savings account is when preparing for a big purchase. So if you don't currently have a savings account, now is the time to set one up at the bank of your choice. The interest terms for a savings account won't necessarily generate big returns, but this will be a secure way to keep your savings and an easy way to keep track of the progress you have made. 
   
   
2. Build a Budget
   Your savings account and investments have the potential to grow quickly – as long as you're disciplined about setting cash aside on a regular schedule. Building a budget is the best way to grow your savings consistently and reliably over time. It's important to be realistic when planning your budget because it's much easier to save when you ensure that you'll still have enough left over to take care of all your current needs.
   
   
3. Understand What You Can Afford
   We all dream of owning the perfect home regardless of price, but shooting for the stars makes it much more difficult to save a down payment. Instead, focus on homes that fit your current budget, and set attainable goals. Speaking to your real estate agent and financial adviser is a great idea at this point because those experts opinion will give you a concrete idea of what you can afford right now. It's also a good idea to consider whether you'll be making the minimum down payment, or aiming higher.
   
   
4. Clean Your Credit
   Your credit history plays a major role in your ability to obtain a mortgage, and clearing up any past credit issues will also allow you to focus completely on saving your down payment. If you haven't checked your credit report recently, now is a great time to do so. You don't need perfect credit to save a down payment or purchase a home, but you'll definitely want to make sure that any outstanding issues are addressed.
   
   
5. Savings Infusions
   Every once in a while, you may find yourself with a nice chunk of cash from one-time payments like tax returns, gifts, or annual bonuses. Any big, one-time payment provides an excellent chance to give your down payment savings a boost, without compromising your normal, day-to-day budget. Over time, those extra cash infusions can really speed up your savings time-table.

There is no doubt that “It don't come easy” when saving a down payment for the first time, but it's a hurdle that nearly every homeowner has to deal with when buying a home. The good news is that a clear, disciplined savings strategy goes a long way, and there's plenty of expert help available to help you accomplish your goals.

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