Realtor.com shared ‘5 Habits to Start Now if you Hope to Buy a Home.’ Below are the top three from their list with a brief description.
#1 – Automate Your Down Payment Savings
One way to jump start your down payment savings is to automate your checking account to automatically save a small amount of your paycheck into a separate savings account or ‘house fund’.
“Amassing enough for a down payment takes discipline & perseverance, but setting up automatic savings can make it easier. If you never see the cash, you won’t spend it.”
NOTE: It’s a myth that you need to save 20% down. On a $375,000 home that’s $75,000!! There are many loan programs available, some with down payment assistance and some that require just 3.5% down. On the same $375,000 home, that’s just $13,125!
#2 – Build Your Credit History & Keep It Clean
When you go to apply for a mortgage, lenders will want to see that you have been able to pay off past debts. This means staying on top of your student loans, credit cards, and car loans and paying them on time! Credit bureaus recommend using no more than 30% of the credit available to you.
#3 – Practice Living on a Budget
Downsizing your spending now will allow you to save more for your down payment & pay down other debts to improve your credit score. A study by Bank of America showed that “95% of first- time buyers were willing to make sacrifices to buy their home faster.” The top 3 sacrifices cited by Millennials when saving for a home are: cutting back on new clothes, a new car, and travel.
NOTE: If you don’t know where your money is going, just start tracking it! Keep your receipts and make a spreadsheet to see how much is being spent on groceries, dining out, clothing, memberships, entertainment, etc. This will show you where you might want to consider cutting back. While there’s convenience to dining out, it’s cheaper to eat at home- it just takes a little prep and planning.
If you are thinking about buying a home of your own, but don’t know where to start, let’s talk!
I have a Buyers Guide that I’m happy to give you- it’s filled with information to help you navigate the current housing market, what you need to know before you buy, how does home ownership compare to renting, how to get loan approval, how to find the right home, strategies to win against other competing buyers and more!