For many people, owning a home is a big part of the American Dream. While homeownership is a major life event and a symbol of all your hard work and dedication, it is also likely the single largest financial transaction you will ever make. For this reason, most prospective home buyers need to save money before undertaking all the usual steps involved in the purchase of a home, such as searching for properties, scheduling showings, and hiring a real estate law attorney. Here, discover a few ways to save for this milestone purchase.

How to Save for a Home

1. Figure Out How Much You Will Need

For many years, 20 percent was the industry standard for a down payment on a house. But this has started to change, and many lenders now offer standard mortgages with lower down payments—some as low as three percent. Certain government lenders will accept even lower amounts. Determine how much you will need by meeting with a loan officer or real estate law attorney, exploring all available mortgage programs, and learning about the added costs you will be responsible for, such as mortgage insurance. Once you have a figure, you can start to save.

2. Pay Down Other Debts

In general, housing costs should not exceed a third of a person's budget. But this can be hard if you are carrying a lot of debt, such as student loans or high credit card balances, and a big debt-load will also make it more difficult to save for a down payment adequately. Aim to pay down larger debts—especially those with high interest rates—as much as possible before saving for a home. This way, you will have more funds to direct toward the down payment, and the mortgage lender may be able to get you a better rate as well.

3. Reduce Expenses

Saving money is all about reducing expenses wherever and whenever you can. Make a comprehensive list of your monthly expenses and see where cuts—no matter how small—can be made. Set a goal to reduce monthly expenditures by at least 10 percent. This might mean clipping coupons, bringing lunch to work, skipping daily trips to the coffee shop, taking public transportation, and tracking all spending.

When you are ready to buy a home, a real estate law attorney can guide you through the process. LaRowe Gerlach Taggart LLP in Reedsburg has been representing clients throughout southern Wisconsin for more than 35 years. In addition to real estate law matters, they offer legal services in family and criminal law cases, bankruptcies, and estate planning. Call (608) 524-8231 or visit their website to schedule a consultation.