How to Save for a Home
Have you been dreaming of owning your own home or even upgrading the one you currently have? With a few simple steps and a little saving, you could be well on your way to move-in day. If home ownership is on your to-do list, follow these simple steps to save throughout this next year.
Track spending and make a budget.
Prior to even looking at homes, decide what amount you can comfortably afford. January is a good time to not only track all your monthly spendings and create a budget of your expenses but to look at your spending habits from the previous year. Once you’ve looked at all your expenses, you’ll have a more complete picture of how much money you truly have at the end of the month and what you can do to increase your savings.
When you go to get pre-approved, keep in mind what the bank may say you can afford might be drastically different from what you can afford and maintain the lifestyle you want. Calculate your total home costs, including mortgage, and home insurance, which can often add several hundred dollars to your total mortgage.
Save for a deposit.
Having a low debt to income ratio will be beneficial when saving for a down-payment and getting a mortgage. Your savings are another aspect of your financial picture that lenders will be very interested in. But you don’t only want to build up your savings to impress lenders. You’ll want to save money for a deposit on your new home.
Finally, nearly every homeowner would agree that you will want to have money saved up for things like home décor, maintenance, and renovations. Start saving early to put yourself in the best position possible to afford the home you want—and the things you want to put in it!
Check if you qualify for any first homeowner grants.
Improve your credit score.
Your credit score is a significant factor that lenders use to determine your eligibility to buy a home. The better your credit score, the better your chances will be to secure a home loan. Some ways to improve your credit score are to pay off any credit card bills, and refrain from opening any new accounts.
With these few simple steps, you will be well on your way to getting your own home.
