Saving up on your first home is exciting as much as it is stressful. The fact that you’re so close to being a homeowner is exhilarating, and all the possibilities for what your future property might look like are enough to make you purchase a home right now.
There’s just one thing preventing you from closing the deal: money. The root of all evil, or in this case, the root of all frustration. You have some saving up to do before you’re ready to put a down payment on your future home, but luckily, some savings tips and home buying advice can get you there faster.
You’ve had this dream for years, and with some extra saving, it can become a reality before you know it. Here are some savings tips to help make your first home happen.
Work Out Your budget
As with anything, you’ll need a budget if you want to reach your savings goal on time. Start by identifying three things: how much money you have saved, how much money you need to save, and when you want to put a down payment by. This will tell you how much you need to save each month.
After that, figure out your monthly income and expenses. Subtract your expenses from your income, and this is how much you save each month.
Cut Your Expenses
If your monthly income is less than what you need to save each month, consider cutting some expenses. This can be anything: subscriptions you don’t need, takeout you can replace with home cooking, your electricity bill, and so on. That magic number is within reach, and by being just a bit frugal, you can make it work.
Boost Your Credit Score
This won’t help with the down payment, but your mortgage will be a lot cheaper with a good score. Mortgage payments go down as your credit score goes up, so be sure to pay your bills on time, and don’t use too much of your credit line.
Not sure how much you can afford on your salary? Local banks and credit unions can help you figure it out by getting you “pre-qualified,” which shows you how much you can afford and what your mortgage payments will look like based on your current financial situation. You can also try using a home affordability calculator online, though these tend to be less accurate.
Determine Your Down Payment
Most lenders recommend you put down 20% for your home loan. However, many first time homeowners can’t meet this goal in good time, so while a smaller down payment will result in a longer and more expensive mortgage, figuring out a reasonable down payment can help you achieve your goal faster.
Negotiate Your Price
First-time homeowners often forget that the price is negotiable. Use this fact to your advantage: negotiating a price for your home can create a lot of wiggle room in your budget and on your down payment.
Plan for Extra Costs
Your mortgage isn’t the only thing you’ll be paying on a month-to-month basis. Water and electricity bills can add up a lot faster in a home compared to an apartment. Additionally, unexpected home repair situations, DIY projects, and sudden disaster can front unexpected costs, leaving you with little room in your budget. When planning for mortgage payments, make sure you leave enough wiggle room for everything else that comes with homeownership.
Seek Out a First-Time Homeowners Program
Depending on your employment or location, you may benefit from a first-time homebuyer program. Each state has its own program to help minimize mortgage costs, provide down payment grants, and offer tax breaks, so check this guide for what your state offers.
Expand Your Search
If you’re not finding a home within budget, don’t forget to check the suburbs or other neighborhoods. Your dream home might be waiting just around the block!
Save Unexpected Income
Did you save extra on your tax return this year? Maybe you came into a raise or a bonus at your job. Either way, put some (or all) of that extra cash towards your savings goal, and your home will arrive that much faster.
Your first home is just around the corner, so why wait? Start planning now with these savings tips.