Saving Up for Your Reno Down Payment
Thinking about buying a Reno home? It takes a little patience, some planning, a lot of looking, and money. With more and more people moving into the Reno area, there’s more competition for homes. That’s caused prices to go up. If you haven’t started saving up for your Reno down payment yet, you need to do it now. FHA loans required at least 3.5% down. Conventional loans may need you to put 5-20% down. Veterans can get into a home with no money down. So, unless you’re a veteran, you’re going to need a decent chunk of change to plunk down on your Reno home purchase. Here are a few ways you can start saving now.
How to Save for Your Reno Down Payment
Determine How Much You Need
First, you’ll need to figure out your target goal for your down payment. While 20% is ideal, several loans allow much less. Let’s say you set 5% as the goal. When you consider that Reno’s average sale price in January 2018 was just under $360,000, that’s a down payment of $18,000. Plus, you should figure in another 2-5% of the purchase price for closing costs. Sometimes, sellers pay some if not all of these. However, that’s not guaranteed. It’s better to have this in your savings account and not need it than to need it and not want it.
When Do You Want to Buy?
Next, decide your time frame for buying a Reno home. Six months? One year? Three years? If you’re still three years out, you’ll need to save roughly $1,000 a month to reach that $36,000 goal ($18,000 for 5% down on today’s average price + $18,000 for estimated closing costs). But, if you want to be a new Reno homeowner by this time next year, you’re going to have to save $3,000 a month. That could mean some serious budgeting right now!
Set Up a Dedicated Savings Account
While your current checking and savings accounts have worked wonderfully so far, you need to eliminate temptation wherever possible. Set up a completely different savings account specifically for your Reno down payment. This can be done at your current bank OR you can set up an account at a completely different bank altogether. That reduces your chances of “dipping into” your savings when you need a little extra walking around money.
Review Your Expenses and Start Budgeting
Now, take an honest look at what you spend each and every week. Utility costs. Gas. Insurance. It all adds up. The best way to track your daily expenses is by writing them down in a notebook. For one week, keep track of every time you spend money on anything (gas, latte, lunch, movies, etc.). Write down the date, where you spent the money and how much it was. This will help you see where you can cut the “extras”. Bringing leftovers to work for lunch and either making your coffee at home or sipping the free stuff at work can add up to hundreds of dollars a month. Also, shop around for better rates on your satellite TV, phone, and internet services. You could be paying way more than you should. Take the money you save from ending these overages and put it into your Reno down payment savings account. You’re already paying this money now. So, you won’t feel the pinch of any extra expenditure on your part. You’re just redistributing where the money goes.
Automate Your Savings
Finally, talk to your employer about allocating a certain amount of your paycheck to your Reno down payment savings account via direct deposit. It can be a percentage or a specific amount. By doing so, that money never reaches your hands. You won’t even miss it and your savings account will continue to grow. When you receive a raise, have the difference deposited into your savings account. The same goes for any bonuses. Before you know it, your savings account will be spilling over.
Saving up for your Reno down payment is easier than you think. Don’t be scared of that big number. Start making steps today for your piece of the American dream tomorrow. And when you’re ready to start looking for that dream home, contact me.