Buying a home offers many benefits over renting. One of the things it does is to future-proof your income from inflation due to rising housing costs. Apartments that once cost $1000 are now $1800+. How long will it take for your income to rise that much? Instead, by purchasing a home with a fixed-rate loan, you’ll pay the same price over the life of the loan.
Additionally, in most cases, home values rise over time. So even if they take a temporary dip, eventually, they will go back up. Home then becomes not only a place to live but an investment. You can use this investment to your benefit by selling it or renting it out later to improve your financial stability. But saving up for a down payment can be arduous and takes time. You can expedite the process by using some of the following tips.
Use a Budget App
The first thing you need to do if you’re serious about buying a home is to start budgeting or to budget more effectively. Many people loosely use a budget, but the truth is they still spend every penny that comes in even when they make enough money to set aside for savings or investments. Using a budget app can better help you plan what to spend in advance and then track how it’s going. This simplifies budgeting so you don’t need to run around with paper and pens to track your finances. Apps can also link directly to your bank account, which makes it even easier. You can track your income, normal monthly expenses, and your variable expenses in an instant when you put them on your smartphone.
Automate Your Savings
Many employers offer the option of splitting your direct deposits into multiple accounts. This means that you can have your savings automatically pulled from your paycheck and put into a separate account. This out-of-sight, out-of-mind approach is very effective for people who struggle not to spend every penny in their main checking accounts. Additionally, some banks offer the option to pull money from your account and automatically put it into savings as well. This gives you the flexibility to set aside money more than once a month to ensure you’re saving up for that home down payment.
One of the things that people struggle with when they are saving for a big-ticket item like a down payment or buying a boat, is that they don’t want to live without the things they are used to buying. This can mean that they don’t want to give up their morning coffee runs or their luxury goods. It’s entirely possible to still enjoy your gourmet foods and favorite perfumes when you’re saving money to buy a house.
You just need to look at things from a different perspective. One of the ways you can do this is to shop sales. Find your favorite Versace Bright Crystal on sale or look for discounts on buying the newest looks from Ralph Lauren. Shopping the sales is an excellent way to help you stay on budget, but still helps you enjoy your life and the little things when you are in full-on savings mode.
Sell Unwanted Things
Want to start the packing process early and make some cash on the side? Sell your unwanted things. You probably don’t need duplicates of everything in the kitchen and if you have designer clothes you never wear and electronics that are hiding away, these items can get you a hefty sum. Put items on consignment, sell things on eBay, and use Facebook Marketplace to get rid of all these extras and add some cash to your
Think Outside the Traditional 20% Down
A conventional loan requires 20% down if you don’t want to also pay mortgage insurance. But there are conventional loan options that require as low as 5% down. If you qualify for one, you will only pay the added mortgage insurance until you pay down the loan enough and have more equity built up. This can expedite the home buying process for borrowers who are ready to leave their rental life for something better.
Saving for a down payment may sound like a big task. But making a plan and sticking to it can help you get into a home faster. Think of creative ways to save or make more money. In the long run, buying a house will help you save and offer a better long-term investment than renting.