Down Payment Saving Methods: Spending, Tax Refund, Side Hustle

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There are a few important areas of savings that may be involved in a home purchase and mortgage acquisition, and the down payment is likely the most significant of all these. Referring to a percentage of the home’s total price that you put down up-front as a way of decreasing risk to your lender and seller, the down payment is usually the largest single expense most homebuyers incur — and having a plan for how to save up for it is often very important.

At VIP Mortgage Inc., we’re happy to offer the best mortgage rates in the Phoenix and Gilbert area, plus loan officers who will assist you with every part of your homebuying process. What are some of the most effective methods we’ve seen for saving up for a down payment, and which might be right for you? This two-part blog series will discuss several themes down these lines.

Tweaking Your Spending

When you make the decision to enter the homebuying world and are starting to evaluate your finances in preparation, one of the first things you should do is take a good long look at your spending habits. There are almost certainly places where you can cut back, and putting that money into savings for a down payment will help to increase your motivation for making these changes. You might, for instance:

  • Cook more meals at home rather than going out to eat
  • Limit your nights out on the town or your weekends spent shopping
  • Drop unnecessary subscriptions or memberships
  • Scale back on expensive vacations for a few years

These are only a few examples, but the idea is that by finding even small ways to reduce your monthly expenses, you can free up some cash that can be put towards your down payment.

Saving Your Tax Refund

For many people, tax season brings with it a nice little windfall in the form of a refund check from the IRS. Rather than using this money to pad your bank account or go on a spending spree, consider saving it all (or at least a significant portion) for your down payment. Depending on the size of your refund, this could give you a nice boost towards your down payment goal.

Starting a Side Hustle

In today’s gig economy, there are all sorts of opportunities to make some extra cash through short-term or even long-term side hustles. If you have some skills or talents that others are willing to pay for, this could be a great way to boost your down payment savings. For instance, you might:

  • Do some freelance writing or graphic design work
  • Drive for a ride-sharing service like Uber or Lyft
  • Give music or language lessons

There are all sorts of possibilities here, so get creative and see what you can come up with.

For more on how to go about saving for a down payment, or to learn about any of our mortgage rates or home loan services, speak to the team at VIP Mortgage Inc. today.

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