Practical Ways Engaged Couples Can Save For A Down Payment
You’ve dreamed of your wedding day for years. The big rock, the stunning dress, the extravagant cake. You’ve imagined every detail since you were a little girl. And now you’ve met your match and planning your dream wedding is more than a fantasy — it’s reality.
This should be the biggest and best day of your life, so spare no expense! Except, have you considered the cost of every aspect of your big day? The average cost of an engagement ring is around $5,000, but experts agree you should only spend what you can afford. According to Time.com, the average price of weddings in the U.S. topped $31,200 in 2014, according to a survey of 16,000 American couples. In 2018, costs have no doubt continued to rise. Chances are, there are costs associated with your wedding that you haven’t even considered. (Take a look at this wedding cost estimator to get an idea just how much you can anticipate spending.)
Sticker shock? While it’s not our goal to advocate for a bare minimum nuptial celebration, we do encourage you to consider the other long-term investments you could make with the funds allocated for your wedding day.
If owning a home is in your five year plan, why not trim the fat of your wedding day and put those funds toward a down payment instead? In 2016, the average purchase price of homes financed with a mortgage was around $290,000. Many potential buyers admit that lacking the cash for a down payment is the key factor holding them back from purchasing a home, but what they may not realize is that not every home loan requires a 20 percent down payment. In fact, many types of mortgage loans, including government-backed loans — such as FHA, VA and USDA — have drastically lower limits on the down payments required to finance your home.
That said, on the average home price of $290,000, the average down payment in 2016 was $32,680, or 11 percent. By cutting your wedding day expenses by one-third and putting that money in savings instead, you could be well on your way to a down payment to purchase your first home together as a married couple. The more you can put down on your home, the more you’ll save in mortgage and interest payments over the term of the loan.
If you are engaged to be married, here are three practical ways you can start saving now for your down payment:
Forego gifts and request cash instead. Considering the average age American men and women get married these days is nearing 30, most couples have the necessities such as dishes, bedding and that high-powered blender. One trip to Target, Pier One or Bed, Bath and Beyond and you could easily find more gadgets to add to your registry, but why not opt for a crowdfunding-like registry instead? Honeyfund.com, a popular honeymoon registry also offers the Home Builder registry, which allows you to suggest gift ideas to help make your dream home a reality.
Consolidate your belongings. Merging your life with your spouse’s can result in a lot of excess — and even duplicates. Whose furniture stays and whose goes? Will you really need multiple televisions in the home you share together? What about vehicles? Can you get by with one car? Start sorting through what you have, determine what you need to keep and take advantage of online garage sale sites, like Facebook Marketplace, to turn your excess into cash you can stow away for your down payment.
Cut back on your spending. If you’re planning to purchase a home in the next few years, living simply for the next year or two can help you save up for a down payment more quickly. Take advantage of these newlywed years and enjoy the romance of cooking meals at home together, rather than spending $50 to $100 (or more) a week eating out. Buy fewer clothes and gadgets. Plan “staycations” rather than vacations. While it may not seem like much fun, every penny you save now can help you get into your dream home. And as a bonus, learning how to save more and spend less now is a foundation that can sustain your marriage when times get tight.
Your wedding day will be the most important day of your life because of who you marry, not because of how much you spend. Setting aside your vision for an extravagant, magazine-worthy wedding, turn your focus to the people — your soon-to-be spouse and guests — and the necessities and funnel any extra funds to your down payment savings.
Are you ready to start saving for a down payment? Getting prequalified for a home loan can give you an idea how much house you can afford, and therefore how much cash you’ll need to save up for closing day. Contact a PrimeLending home loan expert near you to get started.