Are you concerned that you won’t be able to put a sizeable down payment on a house? Are you tired of being at the mercy of whenever a landlord decides to sell your current rental property? If so, then you need to learn all that you can about how to save money for a house.
Doing so can help you afford the perfect home. You can check all of the boxes on your list of non-negotiables, and still get a reasonable monthly mortgage.
See below for an in-depth guide on how to save money for a house and the most helpful tips you can put into practice.
1. Short-Term Sacrifice For Long-Term Financial Success
When it comes to buying your first house, there’s an inner battle that happens. You want to wait until you can afford the house that you’ve always wanted, but you’re finding it difficult to save up enough for that dream home.
You can’t always have the best of both worlds. Too many people strap themselves financially with the property that they rent. You won’t get as far as you want to with only putting $100 or so away each month.
First, calculate your debt-to-income ratio. Simply divide your monthly debts (car payments, student loans, everything) by your monthly gross income, the answer is your debt to income ratio. As long as you’re hovering around 35-percent, you’re looking pretty good!
If you’re hovering at or over that percentage, then you might need to scale back by downsizing your current place. This can cut a significant amount out of your monthly rent that you can then be put towards saving for a down payment on a house.
Even if you only save $200 per month, that’s $2,400 more that you’ll have towards a down payment within a year! Scaling back in the short term can lead to long-term success.
2. Establish Firm Goals
Of course, saving for the sake of saving won’t get you very far. If you don’t have a concrete plan for saving towards a house, you’ll find virtually every excuse in the world not to.
What’s even harder is that most people don’t realize the costs associated with buying a house. There isn’t just the down payment to think about, you also have things like the closing costs, taxes, and insurance to think about. Not to mention things like renting a moving truck, hiring professional movers, and so forth.
The down payment itself depends on the type of loan and lender you get. Some can be as low as 3-percent, such as a first-time homeowner’s loan. For closing costs, you should expect to pay as much as 5-percent of the entire loan amount to finalize the loan.
You can speculate and guestimate about the combined cost of all these things until the cows come home, but you need a legitimate quote to get things going. Seek out a trusted home loan expert to get pre-approved; fill out the application to see what’s realistic for your situation.
They can help you understand what you’ll have to save to get a house in your price range, then act on it. This will make saving for the house all the more realistic.
3. Get Creative With Your Budget
There’s always room for improvement with the way you handle your budget. If saving for a home is your top priority, then your budget needs to reflect that.
Does that mean you can’t go on dates with your spouse? No. Does that mean that you can’t grab a coffee from a certain national coffee brand? Of course not, although you might want to limit the number of trips.
There are many more significant things you can do to save more towards a house each month. Cancel the subscriptions that you don’t use, refinance your student loans, find car insurance rates with cost-efficient premiums.
Fixing your budget isn’t all about cutting back; it’s more so about finding creative ways to lower how much your paying.
4. Find Additional Income Streams
Some of you might be thinking, “If I made more money, then I wouldn’t be reading this article!” But hear us out.
Like we just mentioned, budgeting and saving aren’t about cutting back, it’s more about finding ways to make more money. There are several ways you can generate side money in this day in age, some methods include:
- Babysitting or dogsitting
- Becoming an online blogger
- Baking meals to sell
- Selling crafts (like macrame, custom shirts, etc.)
- Freelance your expertise to your network
- Become a rideshare driver
The list goes on and on. Contrary to what people think, there’s almost never a limit to the money you can make; it’s just about how hard you’re willing to work for it.
5. Always Be Looking
If you only go fishing once a week or once a month, then you’re limiting the odds of catching a big fish, right? But if you fishing every day, you’re far more likely to get a great catch.
It’s the same idea with real estate. To find the right house at the right price, you’ll have to be scouring the market many different times a day (or preferably hire a knowledgeable person to do that for you).
You can start by browsing these homes for some of the finest properties on the Las Vegas housing market today.
How to Save Money for a House: Be Intentional
Now that you have seen an in-depth guide on how to save money for a house, be sure to use all of these helpful tips to your advantage.
Take the time to browse our website for more articles on home buying tips, as well as many other topics that you will find helpful.