Saving for a down payment: Tips for future buyers

To make saving for a down payment easier, there are several strategies future buyers should consider trying

For many buyers in New York, coming up with a down payment for a piece of real estate can be a daunting goal. This is especially true for buyers who intend to save a full 20 percent of the purchase price of the property, which is the amount needed to avoid the costs associated with Private Mortgage Insurance. Although coming up with a down payment may still take time, there are strategies future buyers can use to ensure their success.

Cut extraneous expenses

While saving for a down payment, cutting expenses is the obvious place to start. However, buyers should remember that they do not have to cut every extraneous expense in order to make a dent in their down payment savings. Instead, buyers should look at their budget and determine which expenses they can do without. For bills that cannot be given up, future buyers should find ways to reduce these expenses by asking for discounts, switching providers or requesting rate reductions.

Match savings to spending

This is one trick that can help buyers make significant progress towards their savings goal: Whenever buyers purchase something, they should look at the total amount of their purchase and then contribute an equivalent amount to their savings. This should be done for discretionary purchases because it has the potential to force buyers to think differently about how they spend and save.

Create a fund strictly for savings

Many people struggle to save for a down payment because their funds are intermingled in one bank account. One way to encourage savings success is to dedicate a savings account strictly for a down payment. Once this is done, buyers should view the funds in this account as off limits for other purchases.

Automate the process

After a dedicated savings account has been established, future buyers should consider adding a certain percentage of their regular paycheck to this account. Buyers should do this by asking their payroll department to automatically deposit this amount whenever they receive a paycheck.

Refrain from punishment

Many buyers have a hard time achieving their down payment saving goals because they feel like they have to deprive themselves of life's simple pleasures. Although cutting discretionary spending is a valuable way to save, buyers should still indulge every so often so the savings process does not become painful.

After a down payment has been saved for and the perfect property has been found, buyers may feel inundated by paperwork and the formalities associated with purchasing properties. In this situation, buyers in New York should reach out to an attorney in their area for legal assistance.