It would be an understatement to say that buying your first home can be a stressful process. From choosing the right location to finding a home that suits your wants and needs, there is a lot that goes into buying a home. But perhaps the most difficult part of buying your first home is saving up the money. And while 32% of people looking to buy a home are first-time home buyers, purchasing a home is a huge financial milestone. So let’s take a look at a few simple tips and advice to help you save up for your first home.
The first thing you should do when you start planning to buy a house is re-evaluate your budget. Or, if you don’t have a budget at all, start one. Believe it or not, there is always a way to cut down on your current expenses — especially when you’re trying to save for something as important and exciting as a house. You can start with the smaller things, like getting rid of subscriptions you don’t really use or making your coffee at home instead of buying it every morning. Then, you can move up to some bigger expenses, like groceries and rent. If you’re one of the 33% of renters who move each year, consider moving to a less expensive apartment when your lease is up. If you try hard enough, you can cut down your monthly expenses drastically. And that saved money isn’t extra spending money! Put the money you save into the bank and you’ll be well on your way to having a down payment saved.
It’s also important to have a monthly or weekly savings goal you want to meet. After all, you won’t know how much you’re saving if you don’t keep track of it. Start with determining how much you want to save overall. And remember, this amount should not only cover the down payment, but closing costs and taxes as well. After you have that amount in mind, next think about how long you want to save for. If you want to buy a house within the next year, take your overall savings goal and divide it by 12 months. Breaking your goal down into smaller monthly goals can make the big numbers seem less intimidating and more attainable. Additionally, you should use a specific bank account or tracking method to help keep track of how much you’re saving each month so you know you’re on your way to meeting your goal. Breaking down your savings goal can help you get your finances organized easier.
And lastly, it’s important not to rush this process. While it may seem like you have to buy a house as soon as possible, taking your time to save up enough money will pay off in the long run. While it’s true that some people are able to afford a house quicker than others, like the 9.26 million people in the U.S. that owned a second home in 2017, everyone needs to go at their own pace. You don’t want to set such an extreme budget that you can’t even afford your groceries. So start as early as possible and give yourself plenty of time to save. It’s also important to keep in mind that buying a house doesn’t happen overnight — between placing an offer, closing on a house, and actually moving in, the process can take months — and you don’t want to rush any of it. If you were to sprint through your home inspection, you could miss crucial details. It only takes mold 48 hours to set in and the longer things stay wet, the more likely they are to sustain permanent damage, a detail you don’t want overlooked. So there is no need to rush and taking your time will help ensure you get the right home at the right price for you.
Buying a home is a huge financial decision. But keeping these tips in mind can help ensure you have enough money saved up when it comes time to close on your new house.