Our real estate agents know saving for a down payment is an important topic—one that many buyers are concerned about. First-time buyers in particular need to know the ins and outs. The best St. Louis homes for sale become that much easier for you to enjoy when you've planned ahead on payment.

What is the down payment? Simply, it's an amount you put "down" in cash. This amount isn't part of your mortgage loan, so you need to have it saved up in advance. In the past, it was necessary to have 20% saved for your down payment. Some mortgage loan programs allow for a lower down payment.

No matter the value of the home you want, it's a wise idea to make a bigger down payment if you can afford it. Not only will you lower your monthly payments, but you'll also save money in the long run. A higher down payment might result in tens of thousands of dollars saved in interest over 30 years!

Here's how to get started saving for your down payment the right way:

• Set Up a Budget and Savings Plan
  A household budget will help you find places where you can save money by cutting back. This can be helpful when you meet with lenders and will give you a stronger sense of how much house you can afford. If you aren't already saving, review your options for a savings account that offers a yield on your deposits. Make a goal you can stick to and put aside a certain amount every month without fail.
  
  
• Pay Off High-Interest Debt First
  When you pay off debt, you can potentially increase your credit score. Your credit score is an important consideration in what mortgage loan you qualify for, so this benefits you in multiple ways. Consult the Annual Percentage Rate (APR) of credit cards and other debts to understand which ones cost you the most. As you pay off high APR debts, put the extra funds right back into your savings.
  
  
• Avoid Taking on Any New Debt
  When saving up for your down payment, do your best to avoid taking on any new debts. Lenders are especially cautious when seeing new car loans or other major expenses. But don't worry too much about student loans—everyone knows this takes time to deal with. Remember: Don't close a credit card you pay off fully since the total credit available is important to your credit score.
  
  
• Create Opportunities for More Income
  When you need to save, having more income can be even more impactful than managing your current expenses well. There are many different ways to discover new income opportunities. Everything from "gig economy" apps to part-time jobs is at your fingertips. You may even find fun ways to monetize a beloved hobby. Just remember, nearly 100% of your new income after taxes should go to your savings.
  
  
• Examine Your Down Payment Options
  Depending on your lender, you might have different down payment options. Gone are the days when a 20% down payment was the minimum. Some programs for first-time buyers enable you to put down 5%, 3%, or even no down payment. One good way to get your bearings is to talk to a real estate agent. Your agent can help you plan ahead and see the impact of the down payment's size on your future finances.

Contact us to find out more or get started today.