Did you know that the median cost of a home in America is $200,000? In Columbus, it’s $213,500 to be exact. If you’re a first-time home buyer, knowing how to save money for a house can seem intimidating. The good news is there are plenty of ways you can build savings for your dream home.
Do you want to learn how to save money for a house? Keep reading for 10 expert tips that can make the process easier.
1. Understand All the Costs
When people first try to figure out how to save for a house, they tend to forget about other hidden fees.
If you’re shopping for a home that’s listed as $200,000, there are a lot of other expenses that drive the true cost of this home up much higher.
Taxes, insurance, interest, and homeowner dues are just a few different types of fees that get tacked onto the final bill. Since these rates vary from state to state and lender to lender, it’s important to do your research to see what you can expect to owe.
2. Set a Realistic Goal
Lots of people would love to live in a mansion in a popular city, but many of us could never afford that.
This is why it’s important to be realistic and take a close look at your income and timeframe.
As a general rule of thumb, homeowners should never spend more than 25% of their monthly income on a mortgage payment. Once you calculate how much you can comfortably set aside for a mortgage, you can get an idea of which types of homes you can afford.
If you’re not in a rush to buy a home, planning years in advance can help you save more money in the long run.
The more time you have to save up for a home, the more you can add to your down payment. Having a larger down payment can decrease your mortgage, interest, and other types of homeowner fees.
3. Open a Special Savings Account
Saving for a house is hard if you get tempted easily.
If you’re someone who likes to splurge, then opening up a separate savings account for your down payment can help you avoid going over your budget.
Finding the best savings account can help you achieve your goals faster thanks to high-interest rates and other perks.
4. Find Creative Ways to Trim Your Spending
The best way to save for a house is to analyze your spending and find unique ways to cut your costs.
Here are a few different ways you can spend less to save more:
- Eat out less often
- Cut your cable
- Switch to a cheaper phone provider
- Cancel your gym membership and do free online workouts
- Set a strict budget for ‘fun’ purchases
- Use coupons and shop for generic brands
5. Manage Your Debt
Are you struggling with credit card, student loan, or any other type of debt?
If so, it’ll be a lot harder figuring out how to save up for a house.
Consolidating your debt or paying more than the minimum payment each month can help you save on interest.
6. Use Clever Savings Apps
Aside from opening up a separate savings account, you can also use technology to your advantage.
Saving apps can help you build your savings in many ways.
Some apps round up all your purchases and deposit the excess automatically. Some apps automatically transfer set payments from your bank each month to help you avoid temptation.
This money app guide can help you find the perfect apps to achieve your financial goals.
7. Consider Asking for a Raise or Find a Fun Side Hustle
Has it been a while since your boss gave you a raise?
If so, then it may be time for you to take some initiative and ask for one. Since these meetings can be delicate, it’s best to be prepared with concrete evidence to support your claim on why you deserve a raise.
If you don’t want to suffer through an awkward meeting with your boss, you could also explore different side hustles to earn some extra cash. Side hustles can be as casual as taking some online surveys during your free time or as serious as getting hired for a second part-time job.
8. Avoid Making Big Purchases
If you plan expensive vacations every year, you may want to consider passing or planning a cheaper getaway.
Since vacations can wind up costing thousands of dollars, they can set you back a lot. Although it’s great to treat yourself, you also have to consider your long-term goals.
Other big purchases could also include electronics, designer clothes, a new car, and much more.
If you don’t need something, you should think twice about buying it.
9. Crunch Numbers with a Professional
The more you can save for your down payment, the less debt you’ll have to take on after buying a house.
However, since some form of debt is unavoidable for homeowners, you’ll have to shop around for the best mortgage lenders or brokers and other financial providers. Arranging a few different meetings can help you better understand how much you can afford and what you can expect to owe when you buy a house.
10. Find an Experienced Realtor®
Once you build a solid savings, you can get excited about browsing current home listings.
When you’re ready to start navigating the real estate market, it’s important to find an expert real estate agent who can help you stay within your budget.
Another benefit of working with a Realtor is that they have a better understanding of a home’s true worth. They have the skill and resources that allow them to compare similar homes nearby that have recently sold to provide a more accurate picture of a home’s value.
This knowledge comes in handy once it’s time to start negotiating the final sale price. With the right real estate agent, you could save a lot more than you expected.
And in case you’re wondering if there’s a difference between a Realtor and a real estate agent, I can assure you there is. Realtors are members of the National Association of Realtors and are bound by a strict code of ethics that puts their client’s interest first.
Learning How to Save Money for a House Can Be Easy
It doesn’t have to be overly complicated.
Now that you know how to save money for a house, you can get ready to buy your dream home.
Are you interested in shopping for a house here in Columbus?
If so, I’m an award-winning Realtor who’s been in business for over 14 years. Contact me so I can help you find the perfect home that meets your budget.