How Can Millennials Save for a Down Payment? Here’s How

Posted on Posted in Buyer, Education

Millennials are having a tough time moving from being a tenant to a home ownership. They’re often held back by crippling student debt and high rent prices.  However, that shouldn’t disqualify them from becoming a home owner and those that exercise the right discipline home ownership is attainable.  One big hurdle in attaining home ownership is saving for a down payment.

It may seem overwhelming as to how you can save for a down payment but with these simple money saving tips, you can save and amass an acceptable down payment:  

TIP #1. Send some of your income into your savings.  Set up a portion of each paycheck that will go directly to your savings account. Even small amounts will add up over time. A good way to set a goal is to subtract your current rent from an estimated mortgage payment, and then save the difference.  It will help you get used to anticipated budget as a homeowner.

If you are married, set up a savings account with your spouse.  Make sure the account does not allow either one of you to remove money without both of your signatures.

TIP #2. Get your company’s 401(k) match.  It’s free money, why not take it.

If you are receiving dividends from the stock in your 401K, you should seek out a financial advisor to see if you should have the dividend automatically reinvested within your 401k

TIP #3. Sell stuff you don’t need.  Old books, clothes, or furniture that is collecting dust can help you get some extra cash. Sell what you never use to add to your wallet.

Websites like OfferUp.com, letgo.com, ebay.com are all websites you can use to allow people to buy you belongings.  Don’t forget about Facebook groups like Waterford Buy and Sell.

TIP #4. Refinance your student loans.  Look into the possibility of lowering your interest rate by refinancing.  If you have good credit and an income higher than your debt, you may be able to refinance your loans for a lowered interest rate. Paying less money on your loans now will help you afford more in the future.

Applying for refinancing is just like trying to get a loan.  Your credit score is important. Try to keep you credit score above 650.  

Click here to  read my blog on how to improve your credit score