Saving for Your Own Home

5 tips to help you save for a home of your own

By REsides, Inc.

Most likely to be the biggest purchase you ever make, and a landmark milestone in so many American’s lives, buying your own home is a goal for all kinds of people. However, for most of us, that means taking on a mortgage, and to be approved for that, you will need to put some money down. That isn’t the only thing that anyone thinking of buying a home needs to save for either, from property taxes to closing costs, and of course ongoing repairs and maintenance once you have that dream home, the costs quickly add up. Saving to cover all of that can take time. If you are staring at endless bills while your dream of owning a home seems to have disappeared over the horizon, don’t fret, our 5 tips will help you save the money you need.

Determine how much you need

Saving money, like any goal, is much easier if you can visualize what it is and where you are on the road to success. Traditionally, you needed a 20% down payment to buy a home, but that is not the case today. Some mortgage products require as little as 3% down payment, while government backed mortgages like FHA loans offer products starting at 3.5%. Some types of VA loans and USDA loans require no down payment at all.

So before thinking you need that huge down payment, check what mortgage loans you qualify for, you may be surprised. Remember though, it’s not just the down payment, you may need to pay mortgage insurance for these lower deposit solutions, but that may be worthwhile in the long run. Do the research and decide for yourself.

Take control of your debt

If you have a lot of debt, saving becomes more difficult as a big chunk of your income disappears on loan and credit card repayments. It’s a double blow too, as that large amount of existing debt can affect your credit score, which can make it more difficult to even qualify for a mortgage in the first place.

That means do whatever you can to reduce that debt, not just the amounts you pay off, but the structure. For instance, if you have high interest student loans, think about refinancing at a lower rate to lower your overall cost. Similarly, if you have high interest credit cards, think about fining a low interest card to transfer your balance too. Always try and minimize the interest you pay; it will lower payments and help you save more.

Put your retirement savings plan on temporary hold

Firstly, this is an option for those who are years from retirement. If you are approaching retirement age, this really should not be an option for you. However, for those who are younger, and are actively contributing to a retirement plan like a 401K or IRA, then diverting that money into your home savings fund can speed up your saving efforts.

It is a strategy that you should only apply in the short term, your retirement savings are crucial later in life, but it is especially effective if you are paying in larger sums.

Ask for money instead of gifts

Yes, money can be a bit boring at birthdays, holidays or any other celebration, but asking for money instead of gifts can build that home savings fund much quicker than you imagine. Some family and friends may be disappointed, gift giving is exciting for everyone, but if you explain how it is helping to achieve your dream of home ownership, you can turn that around to become something really special.

Find a side hustle

When you need more money, one of the best ways of getting it is to earn more money. In the past, that may have been a challenge if you have a full-time job, but today with the gig economy continuing to expand, there are options. You could drive for a delivery company a few evenings a week, take on rideshare work, dog walking or pet sitting, there are hundreds of opportunities to turn your time into extra cash.

Yes, when you are already working hard, this can be a difficult choice to make, but to get that dream home, a few hours driving instead of watching TV or hanging with friends could make all the difference . For a short time, it really can be worth the effort.

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