No one wants to rent forever. However, it can be difficult to save money for a down payment. With a few tactics and careful planning, though, everyone can do it!
Renting or living at your parent’s house for too long can be humiliating for many. Especially if you’re surrounded with friends who are buying their own places, and you are still in that same spot. Not to mention if you hate the place you’re staying in! If you have a stable job and a fine credit score, it probably won’t be too difficult to get approved for a mortgage. However, it isn’t always easy to save money for a down payment.
First of all, you need to understand that anyone can struggle financially, especially when times are hard. However, as the rent prices are still on the rise, it’ll just become harder and harder to save money for a down payment down the road. While this is hard, there are a few things you can do. Let’s see what you can do to afford your first home!
Set Your Goals
If you know what your goal is, you’re more likely to save money for a down payment fast. But, how can you know how much money you’ll need? While you probably can’t know the exact amount, setting your goal is something you can calculated. As we are sure you want to avoid paying for PMI, you should count that you’ll pay a 20% of the home’s price on a down payment. If anything, never get a mortgage with a down payment that is less than 10%, as this’ll mean you’ll be in debt for ages due to high interest rates! Then, think about getting a 15-year fixed-rate mortgage on your new Milwaukee home that will take no more than 25% of your earnings. If the mortgage is higher than 25%, you risk not having enough for your other expenses. And don’t forget to calculate HOA fees, as well! There are several online mortgage calculators you can use, if you need some additional help.
Then, think realistically, how long will it take you to save money for a down payment of that amount? Two years is probably a realistic time frame. Just try not to make it much longer than that, as we’re sure you have other life plans ahead. Also, the money you’re saving should be stashed in a money market saving accounts. That one will work well enough.
Cut Some Expenses
Now that you’ve set your goals, look at your current expenses and think about what you can cut. If you pay attention to your spending, you can save a few hundred every month. For example, a gym membership, on average, is $60, eating out costs you around $200, clothing $100, and cable TV or too strong internet that you don’t need and similar services can cost you up to $200 a month. If you buy cheaper brands at the grocery store, you can save even more. All of this is already over $500 in monthly savings.
Take a Break from Retirement Savings
Many people choose to start saving for a retirement early on. While this is great and you should do this, sometimes you need to press pause on such savings if you have more urgent matters. This is only temporary and you’ll get back on track in no time. As soon as you start living your best life in your new house, you’ll once again start placing money back into your retirement account. Keep in mind that it’s never a good option to take cash from your retirement account to save money for down payment. You’ll damage the growth of your retirement savings, and face high taxes at the same time. This mistake can end up costing you thousands in the long run.
Find a Side Gig
If you don’t think you could save money for down payment fast enough with your current pay, a good idea would be to get a second job or at least a side gig. You don’t want to stress yourself too much about this. In fact, think about something you love doing and find a way to monetize it. If you love working with kids, try working as an online teacher. If you love driving around, try delivery. If you are a pet lover, then you can walk dogs for some cash. Any side money is always a great way to boost your savings, especially if you manage to work something you enjoy.
Cut on the Extras
If all else fails, you can go drastic and cut out all or most extras. While this one is painful, think about your new home. You can save plenty if you skip on vacation this year. You surely have plenty of things in your house you no longer need that you can sell and earn at least a few hundreds. And if you got some annual raise or bonus, you can use all of that for your savings, as well.
Sell Your Inherited House
If you’ve inherited a house you don’t want, or that is in such a bad condition you can’t afford to repair it, you can always sell it to a local direct buyer, such as Sparks Property Investors LLC. Direct buyers will buy your house as-is, so you don’t have to worry about paying for repairs or upgrades. We’ll take care of all your closing costs and fees, as well, so you don’t have to pay a dime. We’ll even close the sale as fast as we can, sometimes even in just seven days, so you don’t have to pay too much in holding costs for your unwanted property. And the best part of it all – we’ll pay in cash, so you can get the money and buy your new house as soon as possible.