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When you're buying a house, in most cases, you'll need to raise a certain amount of money in advance to use as a down payment. A down payment is money you pay to make up the difference between the price of the home and the amount of the mortgage.
The more money you have available for a down payment on your home, the less you'll have to borrow. This means you can reduce the interest paid and lower your total mortgage costs.
Your choice of down payment can influence what financing options and interest rates are available to you. The size of your down payment impacts your mortgage amount.
A lot of people ask how they can save for a down payment. Here are three tips you may find helpful:
Pay yourself first: When you pay your monthly bills, make the first payment to your savings or investment account.
Better still, set up an automatic transfer from your checking account to a dedicated down payment savings account, so you don't forget.
Spend less, save more: The less you spend on items you don't need, the more you'll save for a down payment.
Finally, create a spending plan: Record your expenses and compare them to your income. Tracking your spending habits reveals potential areas where you can save.
When you pay yourself first, spend less and save more, and create a spending plan to follow, you're on the right track to saving up for a down payment.
Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A.
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