Let’s be honest – there’s rarely a renter out there who doesn’t dream of homeownership. No matter how adept you are at finding a good place to rent, at the end of the day; owning your own home gives you a sense of security which no kind of renting can provide. But, obviously, buying a home of your own can be expensive. So, when you start to save a down payment for a house, you’ll have a lot to do. Don’t worry, though; this is completely realistic, especially after you take a look at our tips!
Figure out the exact numbers
So, let’s dive into it. You’ve decided to finally take the leap of faith, and start owning a home of your own. Obviously, this is a great thing; owning your very own home is a crucial part of the American Dream, and with good reason. So, is buying a home and hiring a moving company like movingkingsnc.com to relocate you there a good idea? Sure! But before you can save a down payment for a house, there’s a lot you need to think about. Primarily, before you start saving money – figure out how much money you need to save.
You’ll need to figure out all the numbers precisely
Firstly, keep in mind – everyone’s personal finances are different, and there aren’t that many rules we can say are set in stone. Nevertheless, though: you want to be certain that the income you have can handle the weight of a mortgage. There’s one rule here we recommend you follow; generally, no matter how much you earn, your housing expenses shouldn’t go over 30% of your monthly income. If you keep it below that, you shouldn’t have much issues with saving money for a down payment.
How big will your mortgage be?
Obviously, if you want to buy a home and move to a new place; that’s a great idea. It doesn’t matter where, as long as it suits you and you can find a decent home there. Naturally, moving to North Carolina can be simple, as simple as a relocation down the block in New York. The exact place is not really relevant, as long as you know your costs. But with that in mind – how high will they be, exactly?
If you want to save a down payment for a house, you’ll need to take a look at the state of the real estate market first. Primarily, you need to see how high mortgages are on average. Naturally, you’ll also need to be certain how much house you can actually afford, to put it in layman’s terms. For example, if you’re thinking of buying a $200,000 home – your down payment will probably be 20% of that. Sure, it can be lower, if you negotiate the right deal with your lender. But also, a lower down payment means higher interest rates down the line, effectively meaning that you’ll be paying a lot more for your home than you normally would. So, think long and hard about making a decision.
Make a good plan
Once you’ve got all the knowledge about your finances and the real estate market that you need to make an informed decision, the next question is – how do you actually go about saving money? If you want to buy a beautiful home, obviously; you’ll need to start thinking well in advance. That’s why, after all, most people don’t buy a home purely on a whim. Trust us – you’ll want to start to save a down payment for a house quite early on. Preferably, if you’re not in a hurry, you should give yourself at least a couple of years to do this right.
First and foremost, let’s say you’ve got five years to save the money you need. Right away, you should divide the amount into 5 to know how much money you need to save annually. That way, you can also learn how much you have to keep each month. But once you have the annual figures, you can be a bit more flexible and creative with your personal finances. Most of us are able to save better at a certain period of the year, compared to the rest of the time. Also, some people will tell you that investing that money is a good idea. We caution against risk-based ideas, especially if you’re looking at the timespan of a couple of years. Just a good old savings account will do you just fine.
Adjusting your budget
With all of this in mind – once all the figures are set in stone, you’ll have to think about the practical ways to save a down payment for a house. At the end of the day, personal finances aren’t rocket science, and one principle is certain; if you want to save money, you’ll either have to earn more, or cut back on your expenses. And let’s say that you can’t take a job on the side in order to earn enough money. What else can you do?
Generally speaking, most of your savings will actually come from daily adjustments. If you reduce the amount of money you spend on small things, you’ll find that it actually makes a huge portion of your monthly and weekly budgets. So, prepare a detailed budget of your expenses for any given month. Then, see what sort of costs you can eliminate, or at least reduce. You’ll see that you can actually save a ton of money by making relatively small changes to your lifestyle. Just make sure that you’ve got a solid plan, and everything else will fall into place.