Buying a house for the first time can be triumphant and terrifying. This is an investment that you’ll continue to pay of for as long as you choose to live in the property. Not to mention the bundled costs of home insurance, electricity, water, and heating. Will your current or future income be able to cover all of those expenses?
Before you open the classifieds to look for that ideal home, you’ll need to tally up your savings. It’s considered acceptable to put up 20% for a down payment. Although, a minimum of 3% can apply if you’ve joined a home buying program. Even that small payment will still set you back about $10,000 or more. Listed below are some tips you can use to help you start saving for the deposit on your new home.
Pay Off All Current Debts
Saving money will be easier when you reduce the amount of debts you’ve already incurred. Prioritize the loans you’re already paying down. If there are bills that are close to maturing, then pay them off first.
Clearing all of your major debts not only frees up income, but helps your borrowing power. Borrowing power is something housing programs gauge when considering new applicants. Your borrowing power will be calculated based on credit score, the number of dependents, and annual income.
Review Your Bills
In the process of going over your debt notices, check over your monthly bills. Do you notice any bills that are higher than necessary? It might be time to lighten your load.
Some expenses are necessary but controllable. High phone bills can be cut down from limited usage. Streaming media plans and unused gym memberships are frivolous expenses that are optional. If you think you can budget these extras, then start searching for discounts or ask about cheaper plans.
Open A New Bank Account
High risk investment options-such as stocks and real estate trusts-might seem attractive to anyone looking to raise the most money for their down payment. Your chances of losing money, however, are greater. A simple savings account is all you need.
Opening a new savings account keeps you focused on your home buying goals. Use this account to set aside any extra funds you happen to come into. The smallest amount can make a significant difference when purchasing a Cincinnati home for sale. Practicing good saving habits will not only prepare you for the purchase but help in the long run.
Set A Timeframe
Knowing how much money to set aside, and for how long, takes some discipline to get right. It helps to set up a timeframe for how much you want to put away each month. You’ll still have necessities to cover, so there will have to be periods within your time frame that reflect those expenses.
Calculate both the minimum and maximum down payment amounts so you have a realistic goal. Between those extremes, you can set a definite goal to start saving for. The shorter the goal is the most you’ll have to put away each month.