Make your homeownership dreams a reality
Who’s never dreamed of owning a place to live? It is a wish that most people have, but not everyone knows how to save money for a house.
In this post, we’ll help you with that, so you can learn how to start saving and make your dream come true with some simple steps. Keep reading to learn more!
How much money should you save before buying a house?
Buying a house is a big deal, especially if you want to save for a down payment.
But how much money do you have to save up for a down payment? According to the Mortgage Bankers Association, the average down payment on a 30-year fixed-rate mortgage loan was 3.3% in 2017.
It is a huge amount of money to save up. So, the first thing you should do is consider the amount necessary for that.
So, suppose you need to save $30,000 for a down payment. It might seem like a lot of money and cause you to step back.
However, suppose you can break it down and start saving in smaller amounts of $1,250 during 24 months, for example.
In that case, you will be able to reach your goal without panicking because it seems more tangible than if you think of the whole.
Then, if you take one step at a time, even harder, you might be able to make the dream of having a house to call yours come true.
Make your home purchase easier than ever by following these 7 tips
The path to afford a new house is long, but if you are willing to take it, you might need a hand to tell you where to start.
Thinking about that, we’ve prepared a guide to help you find smart ways on how to save money for your house, and increase your income. Stay tuned!
1. Choose a savings account
When saving for a house, a savings account might be really useful since it can help you earn interest on your money.
Because of that, you can shop around for the best options available for you in the market, and make your money grow.
There are some types of checking accounts, but we’ve brought them in a nutshell:
- Traditional savings account: it pays interest monthly, has a minimum balance and limited daily withdrawals.
- High-yield savings account: typically pays a higher APY, and is usually offered by online banks.
- CDs (certificate of deposit): the money has to stay in the account for a longer term. It offers higher interest than traditional savings accounts.
- Money Market: interest rates are higher than a traditional one, and there’s a minimum balance required.
2. Start budgeting
The second tip on how to save money for a house is Budgeting.
It’s one of the most useful ways to start saving and avoiding more expenses than you can afford.
It’s your starting point to have an investment mindset, because once you track your money, you’ll be more conscious and responsible with it.
So, start by knowing how much you earn. Then identify how much you spend on your bills, entertainment, emergencies, unplanned costs.
After that, cut out the things that don’t aggregate to you. Focus on your goal and change the way you deal with your funds.
3. Spend less on housing
If you live in a rented house, you might consider the idea of living in a smaller place to cut down some of your expenses.
Since living compromises a lot of our monthly budget, this is a smart way of saving for your own future place.
Of course, it depends on your circumstances, but if it’s something you can do. Why not give it a try?
4. Increase your income
Another answer to the question “how to save for a house?” is to find ways of increasing your monthly income.
There are many creative ways that you can do that: are you good at teaching? Then you could work as a tutor for some hours a week.
Are you good at cooking? Make delicious brownies, cupcakes or whatever you are good at.
There’s always someone interested in those delicious foods. Also, the chances of getting people to sympathize with your goal are high, since most people dream with their own houses.
So, you could find alternatives to make extra money online, or take advantage of a skill.
Then the money you make can be transformed into savings and get you closer to your dream.
5. Pay down your debts
When saving for the house of your dreams, you may want to keep your debts under control as soon as possible.
If you have credit card balances, loans or anything that is holding your score down, make sure you pay them off.
There are some ways you can do it. First, you could set apart a part of your savings and address that.
Second, you can try to consolidate your debts by having a 0% APR card which would help you transfer your balances and avoid extra banking fees.
Third, if you are paying for a loan, you ought to refinance it with the lender in order to have more money to reach your goal.
6. Automate your savings
How to save money for a house if you are an impulsive shopper? If you struggle with savings because you are prone to consumerism, think of automating them.
You can start by deciding how much you want to save each month.
Once you have that in mind, you can contact your bank to make authorized withdrawals from your regular account to a savings account of your preference.
This way, it’s possible to ensure you’ll always make your savings each month.
Also, it’s convenient and can help you get a grip on your saving habits.
7. Track your progress
Knowing where you stand, and how much it’s missing to reach your goal will help you keep realistic.
So you can analyze and review your options, and find other ways of saving more.
We hope these 7 tips have helped you demystify the question “how to save for a house?”. We know that it’s hard to do it, but it’s not impossible once you set realistic goals and consider your needs.
It might take some effort but it’s worth it. In the end, you’ll have accomplished something big, taken a big step and have acquired a place to call home.
Thanks for reading!
