Buying a house is always exciting. Not only do you get to change your surroundings but it represents a new chapter in life. As with anything in life, a house is something that will cost money; a lot of money.
A house is probably the most expensive acquisition a person can make. Thus, it’s important to be smart about it. One thing that we like to preach is saving money to finance the purchase.
But if you’re a rookie or not particularly savvy with your money, then this is the article for you.
With all that said, let us tell you exactly how to save money to buy a house.
First Things First, Calculate the Down Payment
Before we get into it, we have to talk about the down payment. For many people, a down payment represents 20% of the total cost of the mortgage loan that you need to give the lenders. But this myth has been around for quite some time, and we’d like to say that the down payment is not always 20%.
To know exactly how much, then you will have to talk to your lenders. Some banks offer down payments as little as 3%, while the average down payment is around 13%.
This is important information as you will most likely not be given a mortgage loan if you don’t put up a down payment. Always keep that in mind.
With that said, let’s explore how to save money.
Reduce Needless Spending
The vast majority of people have needless spending habits that ultimately hinder them financially. If you’re in the process of buying your first home, then you should be savvier with your money as you’ll be paying for the home in the next couple of decades.
Thus, you should do all you can to stop spending money on things you don’t need. To do that, you can make a list of all the things you spend money on. Do not write down necessities such as food, water, and all the bills, and instead focus on other things such as bad habits.
A bad habit can be the fact that you’re a smoker. A bad habit is also eating too much food or eating late at night. If you would try to slimmer down and eat only three meals a day, then you’ll be saving a lot of money.
Write down the things that constitute as bad habits and try to reduce or completely cut out from your life.
Start Working On Your Debt
Eliminating debt is very important. Debt alone can reduce your chances of obtaining a mortgage loan. If you’re too much in debt, then you don’t have that much money to spend. The more you eliminate debt, the more your credit score improves.
A great way to save for a house is to spend more to eliminate debt. As you all know, debt cannot go away on its own and you will need to work hard to get rid of it. But once you do, then you’ll start noticing how much more money you have each month.
Put A Hold On Your Retirement Fund
We all like to put money into our savings accounts now and then as it will come good later in life. But as we mentioned earlier, buying a house is the most expensive purchase you can make. Thus, you will need to find money where you don’t currently have.
Instead of using your savings account, you can instead put a hold on it and use the money elsewhere. You can use the money instead to fund the down payment, the move-in costs, or any other cost that associates with buying a home.
It is a short term solution that has long-term benefits.
Get Another Job
Working two jobs is a living nightmare. We’ve all heard it and some of us have been less fortunate to have to do it. And while it’s not the end of the world, getting another job, finding a side gig, or perhaps even asking for a raise is a smart way to come up with extra money.
This isn’t particularly a money-saving tip, but it does help none the less. You might have to put up with it for a couple of months or even years but it will be all worth it in the end.
Don’t Buy the Perfect House
Everyone knows that a house with no issues costs more than a house that needs some work. And while we all want to buy our dream house one day, sometimes that’s not really a possibility.
Instead of paying for the real deal, why not go for a home that needs some work? The reason why you’re doing this is that these houses are slightly cheaper. While you shouldn’t buy a house that isn’t functional or in poor condition, settling for the next best thing might work in your favor.
At the end of it, you can repair the issues that once plagued it and still call it your dream house.
Buy When the Time is Right
In the real estate industry, there is a right time and a wrong time to buy a house. The right time to buy is when the housing market is in supply. This means that there are more houses available than buyers. The wrong time is when the housing market is in demand. This means that there is more or equal number of buyers looking for homes.
Naturally, when the housing market is in supply, prices are bound to be lower as there is no demand. And if you happened to find yourself looking to buy a house when the housing market is in supply, then you will most likely pay less.
It’s always smart to save as much as you can when buying a house as the financial difficulties that await could be hard to handle. We hope that these few tips will help you be more money-savvy and help you reach your goal.