So…you’ve decided to start saving for your new home. First of all, congrats—buying a place of your own is a big deal! Even if you still have a long way to go before you get those keys, there are a few things you can do to set yourself up for success. Here are some of our top tips!
Pay Off Your Debts
Before you take on a mortgage, it’s crucial to pay off any existing debt first. Student loan and credit card debt can have a huge impact on your savings, and owing too much at once may also ding your credit score.
If you have a lot left to pay off, consider consolidating your debt or speaking with your lender. There could be a wide variety of options available to you, which means you won’t have to press pause on your homebuying dreams for very long.
Set a Budget
You can’t start saving for a home without knowing exactly what you want to spend! It can be difficult to gauge how much you should pay for a house, especially if you’re just starting to put money away. However, it’s still possible to set a reasonable (and flexible) price range early on.
Typically, you don’t want to spend more than 25% of your monthly income on housing. Take a look at how much you’re bringing in every month and divide that by four to estimate your maximum monthly payment. If you need some help, our handy mortgage calculator can steer you in the right direction.
Put Aside Money for a Down Payment
Once you’re able to start saving money, it’s time to create a dedicated account for your future down payment. Saving up tens of thousands of dollars might seem pretty intimidating, but if you start small, it’s more achievable than you might think.
Many financial experts recommend using a money market savings account for your down payment, but any savings account will do. Once you’ve opened the account, contribute a specific percentage to it every month—and make sure you stay consistent.
Reduce Your Expenses
Let’s face it—you don’t really need to eat out every week or pay for the top-tier Hulu subscription. Even if you aren’t saving for your new home, cutting unnecessary expenses can help you save hundreds of dollars each month.
Not sure where to start? Take a look at your bank account and start tracking your spending in a spreadsheet. If there’s anything you can live without (at least for a little bit!), cut it out entirely. These small changes can have a pretty big impact!
Ready to Start Saving?
If you have any questions about the buying process, Wilco Realtors is here to help. We have all the resources you need to find the home of your dreams, and we’re always on hand to answer your questions. Give us a call today to see what we can do for you!