Do you need help figuring out how to save for a home? You’re in the right place. I’ve been a homeowner for over a decade.
I made mistakes along the way, when purchasing homes, but have learned from them. Now, I can pass on what I know to help others prepare for homeownership.
If you need tips on saving for a house, here are a few ideas to get you moving in the right direction:
1. Focus on Your Credit When Saving for a Home
If you’re planning on borrowing money to buy a house, your credit must be a priority. I’d like to encourage you to save as much as you can, so your amount borrowed will be minimal.
However, if you must borrow, be sure your credit score is on point. Pay off your debt, stop running your credit, and keep an eye on your credit with a free app to know where you stand before applying for a mortgage.
2. Ditch Your Debt to Save for a Home
I mentioned this briefly, but you need to ditch your debt prior to owning a home. Not only will it boost your credit score, but it’ll also make things less stressful when you own a home.
Debt is a trap. There’s no way around it. Even if you can’t pay off your car or student loans before purchasing a home, be sure your credit card debt is gone.
3. Be Realistic When Saving for a Home
Did you know, when the market is right, there are times you might actually be able to pay cash for a house? Yes, the home will most likely need some TLC and might even be a foreclosure.
However, with the right deal and the right amount of savings, you could own a home debt free. Be realistic in what type of home you need. If you buy low, fix it up, and sell high this could be a smart move as a new homeowner.
4. Dine In More to Save for a Home
You have a few tips for when you get closer to buying your home, but what about now? How do you get to a place of saving for such a large purchase? It’s all baby steps.
Do the little things like skipping the drive-thru or a meal out. Instead, eat at home as much as possible. Groceries can be less expensive than dining out. Therefore, you’re saving money for your home.
5. Go Cheap on the Entertainment
Entertainment is another area where people spend a lot of money. Find cheaper ways to entertain yourself.
Go to the library, take in a free concert, participate in free community events, or take cheaper vacations. There are many ways to be entertained and save money, too.
6. Shop for Best Rates
When you start shopping for homes, begin by shopping for the right bank. Be mindful not to let every bank pull your credit.
Instead, ask them what their interest rates are and for a ballpark of what type of credit score is needed to get those rates. If you’ve worked on your credit, you should be in the right range for the best deals.
7. Save Without Knowing It
In every relationship, there’s a spender and a saver. I’m the saver in my marriage, so I had to find ways to save money without my husband noticing it. Saving is a mental state.
Therefore, I started using apps that would round our debit charges up to the next dollar. The rounded change went into a savings account. I like Acorns, but there are many other apps that can help you save using this method.
8. Create a Budget to Save for a Home
If you’re going to save for a home, you must have a budget. Not only will it help you save, but it’ll also help you live within your means.
Start by knowing how much money you make and how much money you spend. If you need to trim some expenses, budgeting can help you figure this out. Budgets are great for treating your money like a tool because that’s exactly what it is.
9. Save Automatically
Another option to save for a home is to make saving automatic. You can do this multiple ways. One option is to tell your bank to transfer X amount of dollars from your checking account, and place it in your savings account, one time per month.
The next option is to speak with your company’s payroll department about automatically depositing a portion of your paycheck into your savings account. Both of these methods are excellent at ensuring money is being deposited into your savings account on a regular basis.
10. Put Savings Out of Reach When Saving for a Home
It doesn’t do any good to put money in your savings account if you’ll only pull it back to your checking account over the coming days and weeks.
Therefore, I recommend putting your savings in an account which isn’t linked to your checking. If you really need the money, you’ll either be forced to make a trip to the bank or wait a few days until the money can transfer between accounts. This will make you stop and think before moving money around.
11. Cash Only
One of the best things you can do to save for a home is to stop using credit. When you aren’t using credit cards, you’re living within your means because you’re operating on cash only.
Therefore, you’re decreasing your bills, staying out of debt, and not paying interest on purchases. Do yourself a favor and stop the “swipe cycle.” Your budget and bank account will thank you for it.
12. Only Buy What You Need
Stop spending money just to spend it. I mean it when I tell you that saving money is really more of a mental state than anything else.
You must make up your mind to only purchase the things which are actually important to you or are things you need to sustain life. When you stop spending money on a whim, you can save a bundle.
13. DIY is Life When Saving for a Home
I love to DIY. I’m not the craftiest person on the planet, but I enjoy saving money. Therefore, I find cute ideas (which are within my crafting abilities) and make what I need.
My husband and I have flipped an entire house on an extremely meager budget thanks to DIY possibilities. Be mindful of your budget as you DIY projects.
14. Put Everything Extra to the House
When you’re saving for a house, you must create a plan. Step one of the plan is to create a budget. Step two of the plan is to pay off your debt. Step three of the plan is to begin saving money.
As you save money, you must take any extra money from your budget and put it in a house fund. You’ll be surprised how much you can save (and how quickly you can save!) when you put every extra penny you have into saving for one thing.
You now have fourteen different tips to help you save money for a home. Buying a home is a large purchase, and you’ll want to put a minimum of 20% down on your home to avoid mortgage insurance.
Utilize these tips to help you become a homeowner faster. Hopefully these tips will help you take control of your finances and reach your financial dreams.