According to a recent survey by the National Association of Realtors, the median age of first-time homebuyers is 32. With the down payment on a home a fairly large chunk of change, anywhere from 5 to 20%, it makes sense to start saving as soon as possible, which means the answer is now. In this article, we would detail out how much money you need to save for a house and how you can plan in saving money for your house.
How to estimate the money you need to save?
If you aren’t sure how to get started, your first step should be to check a mortgage estimator to determine how much house you can afford, that way you’ll have an idea of how much you need to save. When you first start seeing the numbers, you might get excited if the monthly payment turns out to be less than what you’re paying for rent. But that number can be deceiving – there are a lot of other expenses that come with buying a home, like the real estate agent and loan origination fees, closing costs and a variety of different insurance.
Once you move in, there are moving expenses to pay, you might have to buy lawn care equipment and more home furnishings, and the house may need a few renovations. All of that adds up.
But don’t be discouraged, just start saving now and saving as much as you can by taking these actions.
1) Create a Budget
Creating a budget is an important step in saving for your first house. If you don’t have one, you’ll be lost, kind of like attempting to drive somewhere without GPS or a map. A budget helps you focus on your goal, allowing you to see where you stand and to ensure that you’re on the best path possible for saving as much as you can. Get in the habit of paying yourself first by setting aside a certain percentage of any income that comes in toward your house savings. Ideally, you should also have an emergency savings account to save for unexpected expenses like the loss of a job so that you won’t have to touch your other savings.
Also Read: 6 Amazing Ways to Reduce your Home Loan EMI
2) Find Ways to Cut Back
Once you know what your budget is, look for ways you can cut back on spending. Obviously, the less you spend, the more you can save which is far easier than trying to bring in more income from a second or third job. Do you have a morning Starbucks habit you could cut, can you get rid of cable and start streaming instead?
While all those little expenses can add up to big savings, if you want to go even bigger, you might consider downsizing your current living situation, perhaps living in a studio that may not be in the best location but allows you to save a lot. While it can be a bit painful for a while, once you’ve managed to save all that money, you’ll be able to enjoy living in your own house with plenty of space. Another option is to get a roommate or rent out a room on Airbnb.
3) Look at Lowering Student Loan Payments
If you have a federal student loan, you might be eligible for the income-based repayment program which can help lower it based on your family size and income. Of course, the lower your loan payments are, the more you can save for your first house.
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Team – Myinvestmentideas
When Should You Start Saving for a House