How to Save Money to Buy a Home

It seems like a simple concept: put money away to buy a / home. So, why does it seem so hard to do? According to financial guru Suze Orman, you should have at least 10-20% of the home's purchase price to put down in order not to find yourself financially strapped. There are programs out there to help you buy a / home even if you have less than 10%. But, with 20% down, for example, you won't have to pay the private mortgage insurance (PMI) required by mortgage companies when you borrow more than 80% of the price of a home. That can save you a decent amount of money. Not to mention that the more you put down, the less you have to borrow, which, in turn, makes your monthly mortgage payment less. So, how do you save money to buy a home? It is easier than you think.

First, make a budget. I know, I know. Nobody LIKES to make a budget. But it is incredibly important to get a real idea of what you take in, what you pay and what your actual debt load is BEFORE you purchase that / home. That way, you will know exactly what price range you can realistically afford. Be faithful in tracking expenses by keeping a daily log of every single purchase you make and bill you pay for a month. This will help you see where you spend your money on a daily basis and where you can afford to "trim the fat".

After you've worked out your new "saving for a home" budget, determine how much you can set aside every month for your "we're going to be homeowners" savings account. Many people find it easiest to create a completely separate savings account that is meant only for your downpayment. If your employer offers direct deposit, allocate a specific amount of your paycheck to be deposited into this special savings account. Psychologically speaking, if you don't ever see the money to begin with, you really won't miss it.

While saving for your / dream home, you don't necessarily have to live like a hermit. You can still enjoy movies, eating out and going places. You'll just need to reduce the amount you normally spend. For example, a typical family of four can easily spend around $100 to go to the movies, when you factor in the cost of the goodies you consume while there. Instead, rent a movie and buy microwave popcorn to enjoy while watching. Instead of going out to eat twice a week, cut it back to once and go out to lunch instead of dinner (much less expensive). Pack up your lunch and take it with you to work rather than paying to eat out. "Treat" yourself to a latte once a week instead of spending $5-$6 everyday.

These are just a few ideas to help get you started on saving money to buy your / home. It does take some focus to make your dreams of homeownership happen. But, boy are they worth it! Home prices haven't been this low in years (and they're starting to go up slightly), interest rates remain low and inventory is plentiful enough to find just what you're looking for. Just let me know when you're ready to make the next step by actually viewing homes for sale in the / area. I'll be happy to help.

Originally posted on my Northern Virginia homes real estate blog here: .