Buying a house- every person’s dream. But how to save to buy a house is a nightmare for many. Even after drafting a plan and striving to pay debts, every financial bump might see you drawn far from your goal.
These struggles might shatter most aspiring house owners’ dreams but you should not be one. If you are wondering how you can save to buy a house, here are expert tips for you.
Before even focusing on your likes and the type of house you would love to be in, st an amount you can comfortably afford as your initial budget. What your bank may term as affordable for you may not be what you can afford in real life. Calculate all the costs including mortgage, home insurance, and taxes.
After establishing what you can afford for a house, decide the amount you will need as a downpayment. To avoid paying private mortgage insurance, 20% is ideal for the downpayment.
Pro tip: Your housing cost should not exceed a third of your total income.
This can, however, be broken if you have other debts to pay. If you have a car loan, student loan or credit card loans, limit the amount of money channeled to your mortgage and pay off your debts first.
This will not only relieve you from debt pressure but also increase the chances of securing a better mortgage. Remember, once your debts are paid off you will have some extra thousands and will save faster.
Start living as if you are already paying for that new mortgage. So in addition to your rent and other expenses include savings for your future mortgage. This habit gets you used to the idea of paying a bigger mortgage and moreso you will also be saving towards your house.
Keep in mind the race to owning a house is a sprint and not a marathon. Once you start figuring out extra cash channels and saving options, you are on the right track. Try reducing all of your expenses by at least 15%. If you spend $300 on grocery cut it down by $45 for a budget of $255. It may not seem a huge difference but remember that is just on the groceries alone.
Follow suit on other expense channels and you will have a substantial amount probably enough for your downpayment.
Always remember to set yourself targets and also appreciate yourself if you meet them. On the other side, failing to meet them is not a sin and all the hurdles should be converted to stepping blocks for the next cycle.
Expert Tip: Pay yourself early enough; people tend to wait until the end of the month to establish a figure they will send into the savings account. This is not a good habit, you might find yourself with no money remaining at the end of the month. Normalize having a specific percentage of every money you receive sent to your savings.