For most Americans, buying their primary residence is the largest purchase they’ll ever make. Most mortgages require you to put some money down, and that’s not the only thing you should save for: consider closing costs, property taxes, and ongoing repairs and maintenance. That’s a lot to take on!
It makes sense to take a few years to save up before buying a home. While that may seem like a long time, don’t worry- there are a few steps you can take to speed things up.
Determine Your Need
Many banks offer conventional mortgage loans with down payments as low as 3%, and government-backed mortgages like FHA loans allow down payments starting at 3.5%. Meet with a mortgage loan officer to determine what types of loans you could qualify for, how much house you can afford and how much of a down payment you’d need.
Control Your Debt
Carrying debt can make it difficult to save for a home, as a chunk of your income will go toward repayments. That debt load can also make it difficult to qualify for a mortgage. If you have student loans with high interest rates, consider refinancing them. If you have high-interest credit card debt, pay off as much as you can and consider transferring the balance to a low-interest card.
Put Retirement Savings on Hold
This might not be advisable if you’re close to retirement, but if you’re young and actively contribute part of your income to a retirement plan, consider temporarily diverting that money to saving for a down payment. This should only be short term, but can make a big difference in how quickly you can save for a home.
Use Tech to Make Saving Less Painful
Taking a portion out of each paycheck to save for a home can feel like it’s cramping your style. Try an app like Digit, which automatically saves a daily amount small enough that you won’t notice it.
Ask for Gift Money
When your family asks what you want for a special occasion, tell them you’d love to receive gift money that you can put toward a house down payment. While not everyone may oblige, some may enjoy knowing they’re helping you attain your dream of home ownership.
Source: Credit Karma