Financial Planning: When to Start Saving for a Home Purchase
Saturday, April 21, 2018, 6:00 AM | Leave Comment
If your dream is to own a house and get out from under the burden of renting, then you must do some serious planning.
You must know where you want to live, what amenities you want your home to have and, most importantly, how much money you will need to have saved.
While many individuals struggle to make concrete plans in this area, you can be ahead of the crowd simply by knowing when you should start saving for a home purchase.
When the four following steps have been put into place, you will surely know that the time is right.
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When You Know You Are in an Area Long-Term
There has been great debate in recent years as to whether renting or buying a home is more cost-effective.
While many variables go into the making of this decision, one of the most important things to consider is how long you plan on living in the area.
Most experts recommend that you beginning saving up to buy a home if you know that you will be living in the area for a minimum of five years.
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Before You Get a Mortgage Loan
By the time you walk in the doors of your bank or credit union to apply for a mortgage loan, you should already have your down payment in place.
Your down payment should be a minimum of 10 percent of the purchase price of the home although most experts recommend having at least 20 percent stashed away.
It will be easiest to get a good rate on your mortgage loan if you have excellent credit as well.
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When You Have Some Leeway in Your Budget
You should not be struggling to pay your bills when you start saving for a home. Once you can balance your budget, pay off debt and reduce spending in key lifestyle areas, you should immediately start saving the difference for your down payment.
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When You Are Able to Pick up Extra Work
Finally, if you want to save for a home in only one to two years, you may want to consider picking up some extra work. This could be a hobby that you take to the next level or a home business that you can work on the weekends.
Put all of your earnings into savings, and you will be ready to buy a home in no time at all.
Getting ready to buy your first home may take a while. You will need to stockpile your savings and ensure that you have enough leeway in your budget to be able to make your mortgage payment along with paying all of your other pills.
Plus, you will need to consider other expenses that come along with purchasing a home, such as repairs and maintenance. However, buying a home is an incredibly meaningful experience that will let you feel as if you have roots in your community.
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Rachelle Wilber is a freelance writer living in the San Diego, California area. She graduated from San Diego State University with her Bachelor’s Degree in Journalism and Media Studies. She tries to find an interest in all topics and themes, which prompts her writing. When she isn’t on her porch writing in the sun, you can find her shopping, at the beach, or at the gym. Follow her on twitter and Facebook.
