Purchasing a home is among life’s most important achievements for most Americans and the biggest purchase many will ever make.
Here’s the truth – for almost all mortgages, you’ll have to pay some cash upfront – but there’s more. There are property taxes, closing expenses, plus ongoing maintenance and repairs. You need to save for all of this if you want to be a successful homeowner.
It can be a significant amount, and that is why it is recommended to save for a few years before purchasing a home. That may seem like a long time, but don’t worry, there are a few ways to speed it up.
If you’re planning to become a homeowner soon, we’ve got the best strategies for you to save for a property.
Take a look.
Calculate he Amount You Will Require
In most cases, you will need a 20 percent down payment to purchase a house. However, many banks offer conventional mortgage loans that require down payments as low as three percent.
There are also mortgages backed by the government, such as FHA mortgages, that allow minimal down payments starting at 3.5 percent. Other mortgages, like VA loans and USDA loans, require no down payment at all.
So, talk to a mortgage loans credit union to discuss the types of loans you are eligible for, the house type you can afford, and the amount of downpayment you will be required to pay.
All this information will help you understand the amount you must save for your dream home.
Get Your Debt Under Control
Being in debt can make it challenging to save up for a house. The debt burden could make it harder to get a mortgage, as many of your earnings go towards repayments. If you are under the obligation of debt, try to decrease the amount.
How can you do that?
Let’s say you have just started working and have a student loan. Now, if that loan has a high-interest rate, think about refinancing it to reduce the number of payments and sign up for a lower interest rate.
Similarly, if you have the highest interest on your credit cards, try to pay off the maximum amount you can, and then consider moving the balance to a card with a lower interest rate.
Place Your Retirement Savings on Hold for a Short Time
Okay, this may not be the best option if you are nearing retirement. However, if you’re young and are actively contributing some of your earnings to a retirement account such as a 401(k) or IRA, you might consider temporarily transferring this money into savings for your down payment.
Request Gift Money
This one’s informal, yet a good option if done right.
If your family members ask you what you’d like to get on your birthday, anniversary, or other celebrations, inform them that you’d prefer to receive cash that you can put towards the down payment.
While not everyone is likely to agree, hopefully, your loved ones are happy to help you buy your own home.
Look For A Side Hustle
As the gig economy keeps on growing, there are several ways to earn a quick profit to increase the savings for your down payment.
For instance, take a look at spending a few minutes per week driving around for a rideshare service, delivering meals, taking dogs for walks, or pet sitting.
Not comfortable with these? No worries! You can use platforms like Fiverr and Upwork to offer your services to earn extra income on the side.
Many people hire freelancers for various online jobs such as graphic design and virtual assistant gigs.
We understand that it’s not easy to raise thousands of dollars to pay for a downpayment in a time when you’re already paying for expenses like auto loans, utilities, rent, and childcare. However, with a spending and saving plan in place, you will be in a better position to reach your goal of owning your own home.
Make sure you follow the tips mentioned above to save for your dream home!