Staying in rentals forever probably isn’t your ideal outcome, but taking the plunge to buy your first property can feel overwhelming. After all, it’s one of the largest purchases most people ever make — far bigger than buying a car.
The main hurdle is that accumulating a down payment for your initial home is a major challenge. Rising real estate prices make it difficult for many to amass enough cash to cover that crucial upfront cost.
On top of that, buying a house puts you into unfamiliar territory — full of odd new terms like “closing costs.”
Fortunately, there’s an app to help. Digs is the only savings app built specifically for first-time buyers. After signing up, it does two primary things for you:
- Digs pairs you with a sponsoring lender (accounts without a sponsor cost $3 per month). Your sponsor may offer perks like assistance with closing expenses or sign-up bonuses, depending on the lender. You’ll also be able to consult your sponsor as you save, helping you get ready for the homebuying journey.
- Digs creates savings milestones you’ll hit on the road to homeownership — expenses such as appraisal fees, title insurance or closing costs. The app notifies you when you reach each target and provides educational videos and articles about the homebuying steps.
“We just want you to feel confident about the biggest purchase of your life,” says Pat McLoughlin, one of Digs’ two co-founders. “You earn rewards for putting money away, and you can learn a bit along the way.”
How Renters Can Afford to Become Buyers
Owning a home remains a core aspect of the American Dream, but for many people it feels out of reach.
More than three-quarters of renters would like to purchase a home, yet over half report they don’t have the funds to do so, according to the National Association of Realtors.
“There’s a major savings shortfall in the U.S.,” says Chad Johnson, Digs’ other co-founder. “Our research indicates that roughly 80% of renters want to buy within five years — but around 70% of those have less than $1,000 saved for a down payment. Those are the people we aim to help.”
How Digs Speeds Up Your Path to Homeownership
After you link your checking account to the FDIC-insured Digs account, you can schedule automatic transfers daily, weekly or monthly. You can also connect your partner’s account so you both save together.
Along the way, Digs monitors your progress, offers suggestions and alerts your lender and agent at key moments, like when it’s time to get pre-approved.
Saving for a house isn’t solely about the cash you stash. Digs lets you attach outside financial accounts — other savings, investment accounts and assets — so you can get a realistic view of what sort of home you truly qualify for.
How Much Should You Expect to Save?
The median home price in the U.S. stands at $193,500, per the latest U.S. Census Bureau figures. Yikes!
Good news: As a first-time buyer, you typically don’t need the conventional 20% down payment many people imagine. Government-backed programs for new purchasers may allow as little as 3% to 5% down.
Still, that’s a sizable amount. For instance, a 5% down payment on a $193,500 house comes out to $9,675.
And you’ll also face closing costs. These include paying an appraiser to assess the property’s value and a title company to verify clear ownership. As a rough estimate, closing fees run between 2% and 5% of the loan amount.
Begin Saving for Your Home Today
Any incentives your sponsor adds to your account are designated to help cover closing costs and related fees — provided you take a mortgage from that sponsor. If you already have a lender or agent in mind, you can invite them to be your sponsor.
Digs notes that its network of national mortgage lenders competes for your business, so you could receive competitive rates.
One final insight from a Trulia survey:
When it comes to housing, renters most commonly regret not buying a home sooner instead of continuing to rent.
There’s no better time to begin than now. The earlier you start saving, the better off you’ll be. For tips on budgeting and preparing for a down payment, consider reading how to save for a house.
Mark Rivers ( [email protected] ) is a senior writer at Savinly. He has purchased two homes in his lifetime.
