Buying a home creates an opportunity to provide some long-term comfort for a growing family. Paying a mortgage has the potential to build home equity versus paying rent. However, the challenge for many families is coming up with enough money for a down payment on a home. Financial professionals who represent Team Barber at Family First Funding are enthusiastic about helping prospective borrowers with a variety of home buying challenges.
Create a Savings Account to Buy a HomeEstablishing an account that specifically exists to amass the money needed for a down payment on a home is a prudent idea. Speak with your employer about setting up a direct deposit into your checking account. Pay yourself first by forwarding a portion of your payroll earnings into the account that is dedicated toward buying a home. Automating the process could eliminate an oversight or opportunities to splurge.
Make Contributions to a 401(K) PlanContributions that are made to a 401(k) plan before taxes can accumulate rather quickly. Many employers offer matching contributions that are generally capped at a percentage of a participant’s salary. For instance, if an employer offers a six percent annual match toward 401(k) contributions, an employee who earns $40,000 per year could contribute $2,400 and receive a matching contribution from the employer. That is a combined amount of $4,800.
A co-borrower who sets up a 401(k) plan at work might realize similar benefits, as well. Pre-taxed contributions that exceed an employer’s contributions are often allowed up to a certain threshold. Generally, a first time homebuyer can make 401(k) withdrawals without incurring a penalty. Check with your employer and a tax professional to determine the most beneficial allocation for your financial situation.
Use Money From Your Tax RefundApply a portion of your tax refund toward buying a home. According to Internal Revenue Service, the amount of the average tax refund is $3,120. Many consumers use tax refunds toward bills, buying a car, traveling and other items. However, you could use the money from your tax refund toward a down payment on a home.
Save Your Daily ChangeUsing a canister to stash your loose change is another way to easily save money toward buying a home. At the end of each day, you can simply add your coins into the canister. Additionally, you could also save specific bills, such as your one-dollar bills or your five-dollar bills toward your home buying goal.
ConsiderationsWith several financial tweaks and lifestyle adjustments, you could be on your way to accumulating enough money for a down payment on a home. Contact a Team Barber mortgage adviser at Family First Funding for more information about buying a home.