How to Save For A Mortgage Down Payment

What To Know About Home Mortgages
When it comes to mortgages there are a few things to know. First, banks and lending institutions will compete for your business. They are not all created equally. The more experiences lender, the better chances you have of a better mortgage rate. Second, rates change as the market changes so you want to get pre-approved and locked in on a lower rate when you decide it is time to buy. Third, there are different types of mortgages, you can apply for a fifteen year, a thirty year, a balloon or a fixed rate. Your financial advisor and lender should be able to help you determine which type of mortgage is best for your home buying needs. Lastly, you should never go with the first quote you receive for your mortgage. Gather several quotes from different lenders so that you know that you are getting the best finance rate the market has to offer.

Mortgage Down Payments
The typical suggested amount for a mortgage down payment is 20% of the purchase price of your home. This will limit the need for PMI (private mortgage insurance) insurance. This is an additional fee you will pay monthly until you are able to prove that you have met the 20% down amount for your loan. The PMI insurance protects the lender in the event that you should default on your loan. The more money you put down on your mortgage equates to the lower your monthly mortgage payment will be.

How To Save For A Mortgage Down Payment
When it comes to saving for your mortgage down payment you want to make sure you set up two different types of savings accounts. The first is your emergency savings account. This is to continually be added to in the event you should lose your job or suffer a medical emergency. The money will be there and ready for you to continue to pay your bills until you are able to work and begin rebuilding the emergency savings account. The other account that you are going to establish is your mortgage down payment account. This is where you directly allocate funds to be used for when it is time for you to purchase a home. This way you do not dip into your emergency savings when you are purchasing your home.

You can begin saving for your mortgage down payment by making general and easy reductions in your every day living. These changes may seem minimal, but over the course of a year or two, you will see a substantial amount of savings in your down payment savings account.

The first thing you can do is cut back on your monthly expenses. If you stop every morning for a coffee on your way to work you may want to purchase a coffee pot for home instead. This could save you up to a $100 a month which is roughly $1,200 a year, just from eliminating daily costly coffee.

The second thing you can cut back on would be eating out. If you eat out for lunch 5 days a week you should cut that back to just one or two days a week. Again, you will see a savings of over $100 each month by making this simple change. Plan your meals in advance and bring food from home.

Third, Costly electric bills may be something that you worry about but there are multiple ways that you can lower your electric costs. By investing in efficient appliances and practicing energy efficiency you can save a significant amount on your AEP Ohio utility costs. Smart products like the Nest thermostat have helped to improve home efficiency and lower heating and cooling costs, which accounts for the majority of your home energy use.

By cutting back on frivolous extra dining and drinking and paying attention to your monthly utility expenses you will find yourself saving thousands extra on an annual basis. All of these savings can be reallocated directly to your mortgage down payment.