If you’re planning on buying a home, there’s a very good chance that it will be the biggest purchase you ever make. Even if you’re financing your purchase, there are still other upfront costs to consider, like closing costs and your down payment. Saving up enough money to buy a home can be somewhat discouraging when you consider the various costs involved, but with some patience and proper planning, can be a very realistic possibility. The following tips can help if you’re trying to save up money to purchase a home:
Carefully consider your budget
Many first-time homebuyers make the mistake of matching their current rent payments to what they think their monthly mortgage payments can be, and then shop around for homes in a price range that would equate to those monthly payments. But just because you’re paying $1,000 a month in rent doesn’t mean you need to buy a home that equals $1,000 in monthly mortgage payments. Remember that the more expensive of a home you buy, the bigger your down payment will need to be, the more your closing costs, the higher your property taxes, and so on. If you stick to a realistic and sensible housing budget, it’ll be that much sooner until you save up enough to qualify for a mortgage and make your purchase.
Set a weekly or monthly goal and stick to it
Once you figure out how much you can afford to save on a routine basis, stick to it. You might decide to take out a certain amount from every paycheck, or you might want to just make monthly contributions towards your savings account. No matter what you decide on, consider it as a bill that needs to be paid, and one that is not negotiable. You may even be able to schedule automatic transfers from your checking account to savings account to ensure you don’t forget. Keep that money in an interest-bearing account so you can earn extra.
Cut out what you don’t need
Are you spending money on things you really don’t need and could do without? Cable television, gym memberships that are hardly used, pricey magazine subscriptions—these are just some examples of things you can probably nix. Get rid of what you don’t use or absolutely need, and use that money towards your home purchase.
Pay off debt in bigger chunks
If you’re trying to save money to buy a home, you might be more tempted to only make minimum payments and put that extra money towards your savings. But if you are in debt, paying it off in larger chunks will be much more beneficial to you. Not only will this help improve your chances at getting approved for a mortgage, but by improving your credit score, you’ll likely get offered a lower interest rate. A lower interest rate means lower mortgage payments, which can make homeownership more affordable.
Contact Peachtree Financial Solutions
If you’re receiving long-term payments from an annuity or structured settlement, you may already have the money you need to buy a home, but it’s tied up in a payment stream. The smaller payments might not be enough to buy a home, and saving up could take a while. By receiving your money sooner and in one lump sum, you could potentially take care of your down payment and/or closing costs. To learn more about selling future payments for a lump sum of cash, contact Peachtree Financial Solutions today.
Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.