Are you wondering how to start saving for a house? Let me give you 5 tips to get started today!
Hello, hello! I’m Lindsay, a proud Anthem resident and your local REALTOR® with the Wise Move AZ Team at Realty ONE Group. If you want to stay up to date on all things Anthem and Real Estate then you need to subscribe to our YouTube Channel. Pro Tip: You’re also going to want to hit that little bell icon while you’re there so that you’re the first to know when our new videos are posted every single Thursday!
Rent vs. Own
As your Anthem, Arizona REALTOR® I love working hand in hand with families, every single day, to make home ownership a reality for them. I also know, first hand, the hard work that these families are doing behind the scenes to save the money needed to achieve that goal.
In the current market, it’s quite possible that your mortgage payment could be less than your monthly rent. This is great because it means you have the monthly income to sustain the mortgage. Unfortunately, that’s not enough. You also need to have enough money for the down payment, closing costs, and the ongoing expenses of maintaining a home.
This is the piece that can be very daunting for people, but don’t worry, in today’s video I am going to share 5 tips that you can put into play today to start saving.
How to Start Saving for a House… TODAY!
#1: Set Your Goal
I’m sure that we’ve all heard that goals are more achievable when they’re specific, and I completely agree. In my opinion the best place to start is by figuring out what amount of money you need to purchase your home. Now, this doesn’t have to be accurate down to the pennies, but by having a rough idea, you’ll be able to focus and see your progress.
Even if you are years away from buying a home, I recommend that you sit down with a lender or a REALTOR®, or both, and talk about your options. Between the two of them they will be able to educate you on the types of loans you may qualify for and the price point of the homes that suit your needs. While I would love to see everyone bring 20% down, that’s not always reasonable. It’s important that you understand how the amount of your down payment impacts the cost of your loan.
In an ideal world you want to be spending 25% or less of your after tax income on your mortgage, HOA assessments, insurance, and taxes. You’ll also need to save enough money to cover your closing costs. We have a whole video on closing costs that you can check out here. Now that you have that number, you want to consider when you would like to buy your home. You can set yourself monthly or weekly saving goals, depending on what makes most sense with your schedule.
#2: Open a Savings Account
I encourage you to open a savings account specifically for your future home. Right now, it will be a place where you can squirrel away the money to buy the house and afterwards it can be the place where you set aside money for mortgage payments and maintenance costs.
The reason for setting up a separate account is two-fold. First, you will have the joy and satisfaction of seeing it grow. Second, you will be less likely to spend it on something else.
You may want to see if you can put it in an interest bearing account. Every little bit helps. Also, I recommend that, if possible, you set up automatic deposits to this account on payday.
#3: Look for Cost Savings
If you don’t already have a budget or record of your spending, you should build one. Take note of where your money goes each month. Is there an area that you can cut back? For example if you have a gym membership you don’t use, a subscription you should have cancelled months ago, or unnecessary spending on fast food, deal with them now. You can commit to setting that money aside in your home fund, with minimal discomfort.
Now, I don’t want you to ‘go without’ in any dramatic way. Saving for a house can be stressful but you should still be enjoying your life in the meantime. It doesn’t mean you can never go out for dinner with friends, or buy tickets to that concert you’ve been waiting years to see. The goal is to be aware of your spending habits and cut back where possible.
#4: Generate Additional Income
I’m sure this one sounds super obvious. Of course the best way to save for a house is to make more money. Trust me, I know that’s easier said than done! But here are some ideas on how you may be able to generate a little extra money without overexerting yourself:
- Could you ask for a raise? If you’re in a position to ask for a raise at your current job, this is a great option.
- If you can’t have a raise, could you offer to work overtime to make a little more money?
- You could also sell things around your home that you no longer want or need. This can be quick cash into your savings account.
- You could find a side-hustle that aligns with you interests.
- Or you could ask for money in lieu of gifts! Your friends and family may ask what you want during holidays and birthdays. If you let them know that you are savings diligently to buy a house and that you would love for them to contribute to that in lieu of a gift, they may oblige!
Regardless of what you decide, it’s so important that you maintain balance during this time; don’t overdo it.
#5: Stay Focused and Be Flexible
In very little time you’ll see that savings account start to creep up, and up, and up! You should be so proud of yourself. It’s also at this time that people decide they’ve worked so hard that they should finally take that vacation to Europe. Be careful! Never lose sight of why you started this saving project in the first place. It’s okay to change your plans but don’t do something you’ll instantly regret.
On the other hand, don’t become so fixated on saving for the house that you’re sacrificing things you shouldn’t. For example, if your car needs a new windshield because you took a rock, but you know that it will throw you off your savings goals this month, don’t panic. Life is bound to get in the way sometimes. Do what you need to do and then re-focus. You can do this!
So, there you have it! What are you going to do to set money aside for your future home? I would love to hear which of these things you are planning to put into action first. Let me know in the comments.
If there is anything we can to do help guide you on the path to home ownership, please don’t hesitate to email us at Team@WiseMoveAZ.com
See YOU, next Thursday!