Struggling to make your dreams of owning a home and continuing your retirement savings a reality? You're not alone. The average down payment has slightly decreased in the first quarter of 2016, according to a report by LendingTree, but for first-time home buyers, this can still mean a huge chunk of savings to dish out. Without careful planning, making that down payment could disrupt your ideas of a happy retirement. To make sure that doesn't happen, follow these tips:
Create a budget – and stick with it
Just because you have enough money to pay for a home doesn't mean you can actually afford it. Understanding what you can afford means considering other expenses, like moving costs or insurance payments. That's why you'll need to create a comprehensive budget before looking for a home. Determining your true price range will help you avoid overspending and draining too much of your retirement fund.
Consider all of your lending options
One big mistake that could offset your plans for retirement is not shopping around for a mortgage lender. If you settle on the first deal you get, you could be spending more than you need to. Plus, there are some mortgage options that don't require the standard 20 percent down. It's worth exploring whether you're eligible for these programs if it can help you continue your retirement savings.
Plan for emergencies
Down payments and retirement funds are definitely important savings goals, but there are other costs that will arise throughout your time as a homeowner, especially those that could take you by surprise. A survey by Bankrate found that 29 percent of Americans have no savings for emergencies, which could quickly derail any chance of comfortably retiring.
"These results are further evidence that Americans remain woefully under-saved for unplanned expenses, " said Greg McBride, Bankrate's chief financial analyst. "And rather than progressing, [Americans] are moving in the wrong direction."
You'll initially make this consideration when you determine your price range, but this is an expense that you should always think about putting money aside for.
Cut back on certain expenses
Small expenses, like buying a coffee everyday or holding on to an old magazine subscription, can really add up. Cutting these out of your monthly budget, even temporarily, can help you accrue the funds you need to make your down payment without harming your retirement savings.
Look for alternate sources of income
Another way to solve the dilemma of retirement vs. down payment is by adding more income to the equation. Getting another job isn't always a wise or viable option, but that doesn't mean you can't look for other ways to afford your dreams. Making investments, like in stocks, can help you generate the extra money you need to maintain a healthy savings.