Buying a new home is one of the most common financial goals that many people work towards achieving. For many individuals, a home is the single largest purchase they’ll ever make. However, several first-time buyers typically underestimate the amount of cash necessary to purchase their dream houses.
Therefore, you need to understand your cash flow and the other requirements to help you plan accordingly and adequately to finance your dream home’s costs. Despite COVID 19’s impact on the global economy, there are still many helpful ways to save for your home purchase. Below are some pro tips worth knowing as you start saving for your new home.
Consider all your downsizing options.
Many experts agree that downsizing is a fast and effective way to save more money for a dream home purchase. Downsizing means reducing your living expenses and living below your means to help you save. This way, you reduce the amount of money you pay for essential costs and instead channel that extra cash into a great savings account to fund your home purchase. Selling one of your family’s additional cars and relocating to a less expensive neighborhood are effective downsizing tactics you can try. If you currently reside in a rental property, consider getting a roommate to help you bear your current place’s costs or move to a less expensive and smaller apartment to pay less rent. Renowned real estate companies such as Venterra Realty will come in handy when seeking affordable apartment homes.
Venterra Realty manages several apartment communities in 11 major U.S cities, providing housing to over 35,000 people and 11,000 pets. Andrew Stewart and John Foresi established Venterra Realty, Inc. in 2001 to provide top-notch property management services to clients in the southern United States. The company specializes in identifying, developing, financing, acquiring, and managing multi-family apartment communities. John Foresi from Venterra Realty credits their organization’s success to dedicated, caring, and passionate employees who remain committed to improving residents’ lives by guaranteeing industry-leading customer experiences. What’s more, Venterra self-manages your property management’s aspects to maintain high-efficiency standards that benefit residents, employees, and investors alike.
Try to rent out spare rooms or a spare parking space.
A dormant, extra bedroom in your apartment is an additional income source you can exploit to earn more money for your dream home. If you live in a heavily populated area, renting out your parking space can be an excellent cash source, so keep this in mind. Also, consider listing any extra bedrooms on your property on online hospitality websites like Airbnb. Airbnb allows you to control who can access your space and when they can. This way, you can rent out only when it’s convenient for you. However, these living spaces should be of the highest quality, so consider hiring a reputable renovation company in Easton for your bathroom design and kitchen renovation needs. For example, this home center in Easton, PA, serves homeowners in Lehigh Valley and Western New Jersey and can help you install bathroom and kitchen cabinets, countertops, and other home improvement projects.
Try to defray your debt.
Diverting much of your income towards debt repayment when saving for a home might seem counterintuitive initially. However, debt repayment is essential because having a lot of debt makes it challenging to save for buying a house. Your debt load can also make it more difficult to qualify for a mortgage because many lenders and financial institutions consider your debt-to-income ratio before any approvals. Therefore, it’s a good idea to refinance any student loans with high interest rates and pay off as much credit card debt as you possibly can. This way, you can qualify for a mortgage loan to finance your new house, which you should make as energy-efficient as soon as possible. Consequently, consider a quality custom door installation to help you save much money on your energy costs and improve your curb appeal. Professional installers can fix great custom doors made from quality materials like fiberglass, which you can use as your interior and exterior door options for the best results.
Save for a down payment.
Several homebuyers don’t give enough thought to down payments, so they don’t save enough for this. However, not saving enough for a down payment increases your Equated Monthly Installments (EMI) burden. Also, you end up paying more in interest and other fees. Consequently, commit to a worthwhile savings goal of getting at least 20 percent of the property’s value as your minimum down payment. You can rely on a savings goal calculator to help you know the exact amount of money you’ll need to contribute monthly to realize this specific savings goal.
Reduce your retirement contributions.
If you’re young and actively contribute part of your income to a 401(k) or IRA, consider scaling back your contributions a bit to help you get your home. This tactic is more effective than withdrawing money from your retirement account or borrowing against it to fund your home purchase. Although this is a typically short-term way to help you realize your dream home, saving less for retirement can significantly influence how quickly you can save for your new house. This reality is particularly true if you’re currently investing a sizable portion of your paychecks into a retirement savings account.
Invest all windfalls.
Windfalls are always nice to receive because they’re usually quite significant amounts of cash that unexpectedly come your way. However, many financial experts advise against splurging these unexpected sums of money on other expenses. Since your home purchase is your primary financial target, it would be best to put the cash into your home purchase accounts. These accounts should preferably be high-yield savings accounts that grow your money over time. Additionally, restrict access to the account or choose one that automatically limits access since it can be tempting to access extra funds arbitrarily.
Buying your dream house is a great financial goal that you can realize with the right planning and best practices. The above-listed points are essential insights worth knowing to effectively and conveniently save towards your new home purchase.