Owning a home may still be part of the traditional American dream, but saving up to buy a home sometimes feels impossible. There are ways though, that you can save money for a down payment regardless of your income and budget. Here are some tips to get you started.
Work On Your Credit Score. With a lower credit score, you’re likely to pay a higher interest rate on a home loan. Having a higher credit score usually means a lower interest rate, so you’d be paying less overall for the same house. Your credit score can also impact the down payment that’s required.
Concentrate on Reducing Your Debts. Banks look at your debt-to-income ratio with any home loan application, and one of the best ways to improve your credit score is to pay down your debts. This doesn’t mean you must have zero debts, of course, it just means your debt-to-income ratio may determine how big your down payment will need to be.
Cut Expenses. Do a careful audit of your monthly expenses and make a list of what might be unnecessary, like a streaming service you don’t really watch very often or a subscription or membership you forgot you signed up for. Look into refinancing things like student or auto loans. Think about a less expensive rental home to put that extra money away, too.
Automate Savings. Set up automatic transfers to an investment or savings account every time you get a paycheck. Have tax refunds automatically deposited into your savings, not checking, account.
As you work on building up your savings, remember that this doesn’t mean you have to deprive yourself of anything fun—that would just lead to resentment. Refocus the idea of treating yourself to your new budget. Instead of a fancy dinner out or an international trip, for instance, opt for a less expensive happy hour date or a weekend getaway.
And, when you’re ready to get the ball rolling on buying that house, give me a call! I’m here to help with plenty of information for first-time home buyers. Saving for a Home on Any Budget is Possible!
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