Buying a home is an exciting, but admittedly expensive process. While there are options that help you limit up-front costs when purchasing a home, you still need to have some funds saved up for necessary costs like inspections, appraisals, moving costs, insurance costs, and down payments. Saving money is actually one of the hardest parts of buying a home, granted you’re working with an expert lender through the process. Below, we’ve outlined seven tips that will help you save up money to purchase your dream home.
Cancel Unnecessary Subscriptions
Your streaming subscriptions might not feel like a detrimental cost to you, but these numbers add up. If you have five different subscriptions for $10 a month each, you’re paying a whopping $600 a year. That number might not feel significant, but considering an average home inspection can cost upwards of $500, you’re missing out on vital funds you can use towards an investment in your future. If you have a subscription you don’t use very often, consider cancelling it or even pausing it until you can enjoy it in your new home.
Get Debt Under Control
Before you add a new debt account with your mortgage, it’s a good idea to get other outstanding debts in order. There are a few different ways you can do this. Simply paying off accounts is a great way to move your finances forward, and if you can afford it you can take those monthly payments and reallocate them to a savings account since you’re already used to paying on them. If you have multiple credit accounts, it might be a good idea to consolidate your debt by refinancing some of your balances and paying lump sums on them. If you get a grip on your debt or pay off accounts, you also get the added boost to your credit which can help you have more options when it comes to your new mortgage.
Cut Down on Luxuries
There’s nothing wrong with eating a meal out or buying yourself a gift, but when you’re saving to buy a home, that “treat yourself” mentality can keep you from saving vital funds to purchase your home. A good way to figure out how much you need to cut down is to look at your past spending and reallocate the average budget you spent on luxuries to a separate savings account for your new home. It’s important to not deprive yourself of necessary self-care or pleasures, but even cutting down to one meal out a week or only drinking coffee at home instead of Starbucks can help you save thousands a year.
Save Bonuses and Raises
When you get extra money, it can burn a hole in your pocket (or your bank account), but when you’re saving up to buy a home, these funds can be some of the best contributions. While you don’t necessarily have to lock all of it away, putting back bonuses or the extra amount you get each month from a raise can help expedite your homebuying nest egg. Saving a bonus is more straightforward, but it can be hard to put back the extra money if it’s in the form of a raise. An easy way to save this money is to continue living at the means you were before you got your raise and put the leftover money you have at the end of the month or pay period into a separate account.
Consider a Side Hustle
This tip isn’t for everyone, but if you’re looking for a quick way to gain funds quickly, it might be a good idea to pick up a part-time job. If you’re already paying your living expenses out of a full-time career, this income is supplemental, so all of it can go in your homebuying fund. Part-time jobs don’t always mean waiting tables or working retail, either. Check out part-time or freelance jobs online that can help you earn a few extra dollars without dedicating all of your evenings and weekends. Remember that it’s important not to overwork yourself, though. If you’re smart with your current income and live within your means, you’ll still be able to save to buy your new home.
Test Drive Your Mortgage
The expenses that come with owning a home can be much different than the ones that come with renting. In addition to your regular monthly mortgage payment, you’ll also need to pay monthly utilities, insurance, and have funds for maintenance. A good way to estimate if buying a home is even feasible for you is to estimate how much home you can afford (including all the extra expenses) and adjust your monthly spending to match what that amount is. The great thing about test driving your mortgage is that if what you’re test driving is more than what your current monthly expenses are, you can put that extra money back for your new home. It’s a great way to adjust to homeownership AND save money.
Connect With an Expert
It’s important to not only save to purchase your home, but also ensure you can sustain homeownership for the life of your mortgage. Being able to buy the home is the first step, but you also need to make sure you can pay your mortgage monthly and cover necessary expenses to keep your home safe and comfortable. The experienced lenders at Flat Branch Home Loans are equipped to not just assess your creditworthiness, but look at your entire financial picture to determine if owning a home is possible for you. We’re about helping, so we’ll work with you to come up with a plan to get you ready to own your new home – whether it’s six months or two years from now. Ready to get started? Contact one of our experienced lenders today.
