Do you want to own your home? If so, you’ll need to save about 20% of the home’s purchase price as a down payment. Plus, you’ll also need to have enough money to cover closing costs and other expenses associated with moving into a home.
However, saving enough cash for a down payment and other expenses takes planning, especially if you’re on a tight budget. Here are 10 strategies you can use to help you squirrel away the money you need to reach your homeownership dreams.
- Get a higher paying job, if possible. To own a home, you need to have enough monthly income to cover your monthly mortgage payments, property taxes, homeowners insurance and maintenance costs. This amount is above your daily living expenses, such as utilities, food, car or student loans and other expenditures.
- Keep track of your spending for at least one month. This process will help you see where your money is currently going. Use this to determine where money can to be reallocated.
- Set a budget and stick to it. Determine what you must spend on needed expenses, such as rent, utilities, transportation, insurance and groceries. Set a limit on how much you’ll spend each month on unnecessary items, like entertainment or dining out. Set a specific amount you plan to save monthly. Then put this amount into your savings account – no matter what.
- Open a savings account for your down payment. Either have money directly deposited into this account from each paycheck or transfer a fixed amount from your checking account to your savings each month.
- Adjust your withholding tax. If you got a tax refund this year, you’re probably taking too many deductions. By reducing these deductions, you can increase your take-home pay. Place this extra money into your savings account.
- Pay off credit card debt. Credit card debit can accumulate rapidly. Establish a plan to pay down your debt and make it a priority. Reducing your debt also can help your credit score.
- Lower your rent payments. If you’re renting a large apartment or home, don’t pay for space you don’t need. Get a smaller apartment or house rental. Or, look into renting in a less expensive area. Put the money you save into your savings account.
- Get a used car. Look for a basic car that’s in good-working condition to reduce your car payments.
- Look for insurance savings. Talk to your insurance agent about discounts you may be eligible for. Or, request and compare quotes from different insurance companies to see if you can save any money.
- Cancel services you don’t need. Do away with your land line and use your mobile phone exclusively. Switch to basic cable and rent movies instead of watching them on premium channels.
For more ideas on how to save money, visit www.americasaves.org. By making a few adjustments to your lifestyle and keeping your financial priorities in sight, you can save enough money to purchase your own home.
When you’re ready to buy your home, contact the senior mortgage specialists at Grandview Lending. By working with you to understand your financial situation, future plans and goals, our mortgage specialists can help you find the right mortgage loan to fit your specific needs.
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