Rick BissonIt’s not too late to make New Year’s resolutions. Popular resolutions for 2018 include eating healthier, exercising more, spending less money, saving more money, practicing self care, reading more, learning a new skill, getting a new job, making new friends and finding a new hobby.

For some, their New Year’s resolution is to purchase a home, in which case, the best starting point is to begin saving money for a down payment.

To determine the approximate amount needed for a down payment, start by speaking with a local lender to learn about the different financing options available and the income level necessary to qualify for a home. Down payments can range from 20 percent of the purchase price of the home to as low as zero percent down. Ask the lender for an estimate of closing costs paid so they can be included in a savings plan.

According to data from the National Association of Realtors, about 60 percent of home buyers put 6 percent or less down on their home purchase. Considering the median existing-home price is $258,300, a 6 percent down payment would be $15,498. For most, this down payment comes out of their savings account.

The rub comes when it’s time to make decisions on where these savings will come from. For some, increases in income, bonuses or other employment incentives can quickly ramp up the necessary savings for a down payment.

Others will do it the old-fashioned way – they make sacrifices. Seventy-two percent cut spending on luxury or non-essential items; 56 percent cut spending on entertainment; and 45 percent cut spending on clothes.

Saving for a home can take time. Among recent home buyers, 37 percent saved for six months or less, 15 percent saved for six to 12 months, and 10 percent saved for 12 to 18 months.

A recent Realtor Magazine article outlined the following strategies for salting away enough for a down payment. The first and obvious step is cutting down on “luxuries.” Examples include reducing or eliminating daily coffee runs (saving about $1,300 a year); packing a lunch (saving $1,000 a year); cutting out cable (saving $1,200 per year); eating out less (saving $2,800 per year) and going car free (saving $8,500 per year).

Reducing vehicle expenses may yield the most significant savings for the down payment fund. A couple with two cars may think about selling one car. Eliminating a monthly payment or better yet, if no loan exists – viola an infusion of cash into the account. Another option is swapping a newer car for a sturdy used car.

Moving in or remaining with relatives for a while longer is another money saving option. As a temporary adjustment, some may be able to set aside one spouse’s income for living expenses while socking away the other’s into savings.

Successful savings can also flow by creating new sources of income that are earmarked for the house fund. Second jobs and freelance work are examples of ways to create additional money.

Last but not least, the importance of paying off credit cards cannot be overstated. The interest charges accumulated from a credit card balance, mean more of your money goes to the card company each month.

As the thermometer measuring the down payment savings reaches the top, there’s cause for celebration. However, before rushing out and buying a home, prospective buyers should be comfortable knowing they can afford the additional expenses of owning a home, such as taxes, insurance, utilities and maintenance.

With a down payment in the bank, an understanding of the total expenses of home ownership and pre-approval from a lender, it’s time to contact a trusted, expert Realtor. As you make your way through the search, selection and negotiation of your dream home, stay focused on your budget and remember to remain positive and have fun.

This column is produced by Rick Bisson and his family, who own Bisson Real Estate with Keller Williams Realty of Midcoast and Sugarloaf.