Saving tips for your first home and down payment
With mortgage advice constantly circling us, it’s hard to tell where to start if you’re a first-time homebuyer. Along with that, depending on which generation you go to for advice, the guidance will likely vary. And, to add more to the equation, many people are still skeptical about the housing market and whether or not the steady nature that is currently being expressed will stick in the long run. To get started, get a free rate quote online using our multi-step calculator and contact a financial advisor.
With all of these factors combining to make anyone feel like homeownership could be out of reach, here at vLoan, we’ve decided to take a proactive step and provide objective guidance on how anyone can organize their finances in order to buy a home.
1. Set a budget: Before you decide on a budget for a home, you should start with a budget for yourself. Buying requires saving and in order to save, you have to start with looking over your finances, deciding how much you want to save, and set a monthly budget. We should add, this step is easier said than done. Being honest with yourself, your spending habits, and where you waste your money are not easy. However, taking this step is a great start to getting your finances and savings in order to buy a home and make that down payment.
2. Save, save, and save some more: Once you have a monthly budget mapped out, it’s time to start saving. With endless saving tips circulating online, it’s best to simplify things and take a two-pronged approach. Step 1: Set up automatic savings. This will pull money out of your paycheck and send it directly to a savings account, keeping you from seeing what you’re missing and money constantly flowing into savings. Step 2: Don’t touch anything! If you need to open a savings account and lock yourself out, then do it. If you have the self-control necessary to avoid a locked account, then more power to you – just make sure the money you’re saving, stays in the savings account.
3. Downsize: While budgeting and saving may seem like enough, it’s also important to downsize. There’s no need to sell off your belongings, but finding cost savings where you can is a prudent step if you’re trying to align your finances with purchasing a new home.
4. Don’t touch those large chunks: We understand that you may have been waiting for that yearly bonus to fund the down payment on your next car, but you may have to settle with the rusty Chevy you’ve had since college for a little bit longer. If you do get a bonus at work or a large sum of money, this could serve you better if it’s attributed to a savings account and set aside for your first home. Trust us, this notion is worth the patience and investment.
5. Work more: If you have the skills and the time, an extra income through freelance work is never a bad idea. Working more allows you to keep your eye on the prize of owning a home and will help bring in more income to add to your already increasing savings account.
Our vLoan team often encourages those who are thinking about buying a home to start with the pre-approval process. While these savings tips will help you prepare your finances, pre-approval can tell you where you stand in terms of your credit history. This will help you decide how much needs to be set aside and how your monthly budget will look once you make that big purchase. For more information about pre-approval or buying your first home, feel free to reach out to one of our knowledgeable team members.