What’s the easiest way to save for a down payment on a home?

Part Two- How do I save for a down payment on a home?

Here’s my suggestion – What’s your mortgage payment going to be?

Lets’ say it’s 1,7500/month for a 350,000 house.  Start saving that amount every month NOW.  You’ll be able to see if you can really afford the mortgage payment.  You see the bank would love to lend you more money to buy that bigger house because they make more money by doing that. To them it’s just a formula on a paper.   But can you afford it and live in your current comfy way??  Everyone has a different lifestyle however we all know someone who is house poor and that is NO fun at all.  I’ve seen good marriages fail because there was no fun being had due to a huge mortgage payment.  What’s worse it’s over many years – hard to see that light at the end of the tunnel.  What use is that big house if there’s no one to share it with??

If you start saving that monthly mortgage payment now and keep doing it each and every month, with no exceptions (because the bank won’t let you away with not paying it each month). Then in less then 2 years you’ll have a 10% down payment.  Save for just over 3 years and you’ll have a 20% down payment.

 If your income won’t support the whole mortgage payment because you’re currently paying rent then save the difference between what your new mortgage payment would be and what your current rent is.

Using the above example and say your rent is 800/ month..1,750 – 800 = 950.  Pay your rent each month but also save $950 each and every month for your down payment.  You will have close to 5% down in 18 months and in 3 years you’ll have over 10% down. 

Remember you can’t take a month off if you’re going to Cancun because the bank wouldn’t let you away with that.  You can’t let yourself away with that either.

 Smart money means being disciplined even though it’s hard sometimes.

More importantly you’ll know how it feels to be tied into your mortgage payment so you’ll know if your dream home can comfortably fit into your lifestyle plan.

-Jodi