The housing market might be fickle, but it doesn’t mean you need to give up on the idea of your dream home. There is denying that buying a home is probably one of the most expensive purchases you will ever make. In which case, you want to ensure you’re able to find the best realtor, so you can find the right home for you and save accordingly for it when the time comes.
However, what can you do now to save? After all, you want to be able to start house hunting once you have more than enough to save for a down payment.
Check out these tips down below to get closer to finding your perfect home!
Tip #1: Compile a Budget to Review
How can you start saving for a home if you don’t know what you’re working with regarding your finances? Once you list out all the money you earn, debt, and expenses, you can have a clear picture of if you have any money leftover you’re able to put to the side for your future home. If you have a partner, include factoring in your partner’s into the overall budget to see if your combined incomes will make it easier to afford a home and find any issues of expenses with one another that can be reduced.
Tip #2: Look at How Much You’re Making
Your budget will factor in how much you get paid. However, if you have been in your job for a while and working at above-average performance, consider asking for a raise to help get you the extra money to save up. Alternatively, if you find out your job pays below average for your position, you should consider finding employment because the one that pays you better will make saving for a home more feasible.
Tip #3: Don’t Splurge on a Luxurious Vacation
It can be tempting to treat yourself to a fancy vacation as the perfect break from work when you work so hard. Not saying you shouldn’t go on vacation since everyone deserves a break from work (after all, some jobs force you to use up your vacation time), but rather it doesn’t need to be an extravagant trip. Consider a staycation like planning out events or classes you would enjoy or staying within the area by checking out your local museum or a cost-effective camping trip.
Tip #4: Staying Within a Set Price Range
Once you know what you’re working with regarding finances, you need to be realistic about what type of houses you can afford. That house you saw outside your price range might seem like your dream home, but it can quickly turn into a nightmare, and you won’t see it as such once your finances turn sour. In this case, a good way to find out what you can afford is by getting a pre-approved mortgage since it can give you a better idea of what you need to save for a down payment. Typically, a down payment is determined by taking a percentage of the home’s purchase price.
Tip #5: Cut Out Unnecessary Expenses
Do you have subscriptions and memberships to services you don’t use? What about spending too much money on eating out or UberEats? Or are you more of an impulsive shopaholic? If any of these apply, take a critical look at those spending habits and try to eliminate them to save up more money for your home. These are unnecessary expenses as they’re all temporary while a home can be forever. Think of this tip as practice in delayed gratification, with the reward of a home greatly outweighing many little things.
Tip #6: Set Up Automatic Withdrawal
It can be hard to remember to put aside money for your future home. A good tip would be to set up automatic withdrawal with your bank to take out a certain amount into a savings account. Ensure you set it up during a payday, so you still have plenty of money left for yourself and expenses. Additionally, if you can make the savings account less accessible to you, it can help deter you from dipping into all that you have saved already.
Tip #7: Open a Tax-Free Savings Account
If you’re saving money for a home, you don’t want your current savings account to be holding you back from getting enough money for a down payment. With a Tax-Free Savings (TFSA) account, your contributions aren’t tax deductible, including any gains earned inside the account. TFSA is perfect for first-time homebuyers because you don’t need earned income as a means of contribution. It makes it ideal for young professionals fresh to the workforce who are on the lower end of the tax bracket due to lower entry-level incomes.
Tip #8: Keep Credit in Good Standing
Nothing makes it harder to own a home than to have bad credit. Keep your credit score high by ensuring you stay out of debt (i.e. paying bills & credit cards on time). If you’re already in debt, you should find ways to pay them off immediately or through affordable payment plans. Once you’re out of debt, your credit score will improve eventually, and you can have a better chance of looking for a home.
Tip #9: Turn a Hobby into a Side Hustle
Are you into carpentry? Or do you find joy in creating cute jewelry or art pieces? If you found many people urging you to sell your creations, truly consider doing so! You would be surprised by how much extra money people have gotten from turning their hobby into a substantial income through online stores like Etsy. Give it a shot, and you might be surprised how much people are willing to pay for your creations! In this way, you can easily start saving a lot more than you would have been before.
Tip #10: Ask for Help from Family
Your family only wants what’s best for you. Consider asking them to help save for your first home through birthday and holiday gifts. And if you’re planning to get married or have a baby, ask them to contribute as wedding gifts or baby showers. However, ensure you check if there are any conditions associated with gift money with your mortgage type. It can affect whether it can count as a contribution to your house’s down payment.
Saving for a house is a big deal for first-time homebuyers. With how shaky the economy and housing market can be, it may seem impossible to save for a house. Hopefully, these tips can help you save better and get you closer to becoming a homeowner soon!