You need to start saving for a home immediately as soon as you plan to buy one. Almost everyone is aware that buying a house is probably the largest purchase they will make in their lives. However, several first-time homebuyers underestimate the quantity of cash required for purchasing the dream home of their choice.
Break Down the Costs Involved
The largest home buying cost is the down payment for your home. Normally the buyer is expected to pay in the region of 2 to 5% of the overall price of the house. The standard rates on FHA loans available for low-income earners are 3.5% of the buying price. Keep in mind that these FHA loans are tough to obtain. A person that will qualify for a mortgage is expected to pay up to 20% for a down payment. The closing costs are in the region of 2-5% of the purchase price. You need to find ways of saving money on the purchase by doing things such as doing a DIY move or looking at different homes to purchase.
Start By Paying Yourself
The very first thing you need to do is begin saving for a house. Prepare a dedicated account for this purpose. Begin with the proper handling of your paycheck. You can set up an automatic withdrawal to your account to move the money into the investment account for the day after you have receive the paycheck. This will ensure that this large amount does not burn a hole in your pocket. However, keep in mind to complete this task only after you have paid unsecured debts, interest, and the credit card bill.
Invest All Your Windfalls
If you are getting a tax refund, a bonus at work, or some other unexpected amount of money, try not to spend it. Place this extra cash instead in the home-buying account. Consider saving accounts that are earning interest so that the money grows with time. It is also tempting to access the additional funds. Therefore restrict your access to these funds or invest in an account that automatically restricts your access.
Move to a Cheaper Place
If you are living in a rented place now, think about moving into a less expensive, smaller place. Try to get a roommate for sharing the costs of your current accommodations. If you can save $300 per month by doing this on rent, you will end up saving $3600 annually. In case you are single, think about living with friends or family for a year. The average rent for a single person is around $1400; therefore you can save a lot of money annually by doing this. These savings can go a long way toward saving for a home.
Save Less For Retirement
Try not to withdraw money from your retirement account or borrow any money against it. You will be forced to repay the loan with interest or be subject to tax penalties for withdrawing this money. This can hinder your plans of saving for a home. Rather, scale back the contributions a little bit until you have achieved your target of moving into the new home. For instance, you might be contributing more than required for the company match for the 401(k) Plan. You may wish to trim down this contribution and place the additional cash in the house fund.
Hire a Real Estate Agency
One of the main problems people have with using real estate agents is having to pay their commissions. They feel, why should I pay this person to do things I can do myself? But the reality is that working with a proper real estate agent is worth a lot more than the commission you will have to pay. It also reduces the stress involved in the home buying process making it less expensive and less time-consuming. If you live in Australia get in touch with Lotmix – house provider for this purpose.
Apart from the tips mentioned above, you can also try to reduce your everyday expenses. Find ways of making a bit of extra money. Are you okay with a part-time job? Do you possess skills that can get you the odd freelancing gig? If you can do these things, you may place the additional income in the housing fund.
We hope you found this blog post Looking to Buy a Home? Effective Strategies to Save Time and Money useful. Be sure to check out our post How to Get A Mortgage As a Low-Income Buyer for more great tips!
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