With bills piling up from rental, phone and data connection, and utility fees, sometimes, the dream of having your own home seems elusive. CNBC mentions that 40 percent of the US population do not have their own homes and are renting instead. Research has found that most Americans are having difficulties saving up for downpayment for their dream home.
But you should not give up just yet. There are ways to achieve that dream house. The first step is to use a mortgage rate tracker. Then, you can make decisions based on it and do proper saving techniques that can help you fulfill that American dream.
Saving for a home downpayment involves determination and willingness to change your lifestyle. Willingness to change spending habits is crucial to make your dream come true.
Good Spending Habits
To start practicing good spending habits, it’s recommended to monitor your monthly spending. List bills and expenses so you can see which areas you tend to overspend; these are the areas where you can minimize spending. Also, set a reminder for monthly bills so that you don’t have to catch up on payments; this also ensures that you allocate money first on necessary things.
Good spending habits also include trying to rely less on credit cards. To get approved for a loan, you need a good credit score; when you constantly use your credit card and don’t pay it on time, you get a bad credit score. As a general rule, spend on things you can afford; do not pay for something that may take you more than three months to pay.
Unwise use of credit cards goes hand in hand with impulsive buying. Impulsive buying may make you happy in an instant, but you will quickly feel buyer’s remorse once you realize that this isn’t included in your budget. Also, if you don’t monitor impulse spending, you won’t realize that this is bringing you financial instability.
To remedy the need for impulse buying, try to pause before buying. Wait for a week to a month before you purchase; this way, you can thoroughly think if you really need to buy a product or not. When shopping, make a list of things to buy with you and try to stick to that list at any cost.
If it’s really hard for you to control your impulse, bring an exact amount of cash and leave your credit card behind. This way, you have no means of buying things other than what you really planned and need at the moment.
Assessing Financial Situation
When saving up for a home, you need to assess what kind of financial situation you are in. Create a specific budget for the kind of home you want to buy. When you finally decide to buy a home, you should be positive that your mortgage payments will fit in your monthly income; as a rule, a mortgage payment should be less than 28 percent of your income per month.
When budgeting, you should also keep some money with you. Do not let your savings run dry; save for a rainy day. It means although you may have a steady income at the moment, this may not always be the case. Take the pandemic, for example; many lost their jobs, and even those who have been working for a company for years have been laid off.
As you create your budget, follow the 50/30/20 rule; allocate 50% for needs, 30% for wants, and 20% for savings. It will also be beneficial if you overestimate expenses when calculating your budget; this ensures that you have allocated money for necessary miscellaneous expenses.
Overall, the best way to save money is to have a goal. Having a definite goal like buying your own home motivates you to leave some money in your bank account.
Saving money while building your home is also possible. Selecting smart designs and materials can help you save some bucks and make your dream come true without breaking your bank.
One way to save while building your house is by taking advantage of your chosen location’s natural features. Save mature trees in the land where you’re building and save on landscaping. Asking advice from a good designer or a good contractor can help you plan effectively and affordably, too.
When building your first home, keep it simple. Complex designs may bring your building costs up. A simple roof shape, for example, will cost less than building a complex one. Single-story buildings are more affordable than two-story homes. Choosing standard-sized doors and windows are more cost-effective, too.
With all these cost-effective measures, achieving your dream home is possible.