Looking for your first home is an exhilarating experience, but the perfect home’s cost may be intimidating. Home loan lenders often want a 20 percent down payment on any house to keep the loan amount low compared to the property’s value.
Even a small cottage can cost more than $100,000, requiring a $20,000 down payment. Properly saving money for a new home takes budgeting and frugal spending over several months or years, depending on the amount.
Set up an automatic payment system between your checking and savings account. After each paycheck, allocate a set money amount to go directly into savings. This saving strategy prevents you from spending your entire paycheck and forgetting to save a specific amount.
Have A Yard Sale
If your storage unit or garage is overflowing with items you never use, set up a yard sale. Display the items prominently outside your home and advertise with signs around the neighborhood. People may see your items as treasures and pay you cash on site. Because the cash is tax-free, this is a unique way to save for a home quickly.
Although you must pay taxes on the sold amount, sell any bonds, mutual funds or stock options that you have. Depending on the investment, you can possibly have a big sum to start your home saving fund.
Talk to your investment professional to determine if this is a smart choice for your situation. Taxes and early-sale penalties may make some investments a poor choice for a home saving strategy.
Evaluate Your Buying Habits
Stop buying toilet paper in six-pack rolls and purchase a bulk package instead. Buying non-perishable items that you’ll use in bulk saves you money over time. Look at your shopping cart and remove any non-essential items, including junk food or games. Be aware of your shopping habits and buy only essential items within your budget. Impulse buying should be in the past. A $10.00 discount movie you just bought could be applied to your home saving fund.
Inspect Your Insurance
Raise your deductible on your auto insurance, especially if the vehicle is older. A higher deductible gives you a lower monthly payment rate. Be honest with your finances, however. Only raise the deductible to an amount you can afford if there is an accident.
Turn off lights around the house and reduce your use of central air or furnace systems. Your current home’s energy bill each month can be staggering. Using less energy allows you to save extra money toward your dream home.
Use your bank’s approved ATM sites to avoid exorbitant fees. Pay all bills on time to reduce any late charges. Small fees add up over time, which robs your saving fund of extra money.
Once you have enough money for a down payment, continue with your saving fund. You need emergency money for future repairs on your dream home and exciting upgrades, such as new carpet or paint. Enjoy the reward of saving for your home that brings a long-term investment into reality.