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How To Save A 20% Down Payment by myCAREexpert

How To Save A 20% Down Payment by myCAREexpert

 

If you're looking to buy a home, it's never too soon to start saving.

 

Living in sunny California is going to cost you.  The west coast is home to some of the most expensive real estate in the nation.  Many are tempted to take advantage of loan programs with low down payment options to reduce the initial out-of-pocket investment.  Saving for a down payment of $50,000, let alone $100,000 or more seems insurmountable to many would-be homeowners.  But keep in mind, anything less than a 20% down payment will require private mortgage insurance (PMI), an added fee that is tacked on to your monthly mortgage payment, and it may end up costing you more in the long run.

The best way to try and save up for a down payment on a home is to make a plan and stick to it.  Estimate how much cash you will need to purchase a home in your target price range – ideally 20% of the purchase price and another 3% for closing costs.  Then determine how much money you can devote to that goal on a monthly, weekly, or daily basis.  Setup an automatic transfer into a savings account specifically for your down payment, and don’t use that money for anything else.

Even after you have saved for the down payment, make sure you can afford the home.  There is much more to consider than just the sticker price, and many people forget to factor in property taxes, insurance, utilities, maintenance, and repairs. 

The Real Deal

Take a look at what it would cost to save for a 20% down payment in 4 of California’s most popular markets.

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Sacramento

Median Home Price: $275,800

20% down payment: $55,160

How much you'd need to save for a down payment:

5 years: $30.20 / day

10 years: $15.10 / day

15 years: $10.10 / day

Los Angeles

Los Angeles

Median Home Price: $434,700

20% down payment: $86,940

How much you'd need to save for a down payment:

5 years: $47.60 / day

10 years: $23.80 / day

15 years: $15.90 / day

San Diego

San Diego

Median Home Price: $510,300

20% down payment: $102,060

How much you'd need to save for a down payment:

5 years: $56.00 / day

10 years: $28.00 / day

15 years: $18.60 / day

San Francisco

San Francisco

Median Home Price: $748,300

20% down payment: $149,660

How much you'd need to save for a down payment:

5 years: $82.00 / day

10 years: $41.00 / day

15 years: $27.30 / day

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This article has 4 comments

  1. ashley03231994@gmail.com

    Yes, after doing tons of research, the higher you can get your down payment, the better it’s going to be afterwards. Usually doing this, you would have much lower house payments and less time before its paid off.

  2. donsaun99@gmail.com

    It really sounds easier said than done, however, saving money is kind of a little bit hard for most people nowadays, expecially in the United States where you’re always spending money on absolutely anything. Thank you for the information though.

  3. ashley03231994@gmail.com

    To save our down payment amount, we saved for about 3-4 years. My fiance works 5 days a week and every payday we would put some back to save. I work from home and was putting almost all of my income aside to be able to get enough for a down payment.

    • donsaun99@gmail.com

      It’s such a good thing when the guy/girl you’re with helps you out with absolutely everything, that’s really important in relationships, good luck!

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