7 ways to save money for a home
Homes are expensive, and saving money to buy a home can take years. In fact, the average selling price of a new home was $ 346,400 in January 2021, according to US Department of Housing and Urban Development (HUD) and US Census Bureau, and the average sale price was $ 408,800. For first-time homebuyers, committing to a purchase price in this range can be daunting. However, mortgage rates are low, so it is possible to buy real estate and have monthly payments equal to or less than what you pay in rent.
If you’ve set a savings goal, including a down payment and closing costs, and you’re preparing to buy, use an online mortgage calculator to help you calculate your monthly payments and understand how much you’ll need to save before you move.
Follow this guide to discover the seven ways to save money for a house:
- Save extra money (like stimulus checks, a tax return, or a year-end bonus)
- Get low-to-zero mortgages
- Consider a credit card with balance transfer
- Take advantage of your retirement plan
- Automate your high yield savings account
- Find a roommate
- Reduce the non-essential
And when you’re ready to move forward with finding a mortgage, head over to Credible, where you can compare multiple lenders and interest rates in one place without affecting your credit score.
1. Save extra money (like stimulus checks, tax return, or year-end bonus)
The third round of dunning checks totaling up to $ 1,400 for individuals, was distributed to millions of Americans as part of President Biden’s $ 1.9 trillion coronavirus relief plan.
Your stimulus check, any overpayments on your 2020 tax return, or an unexpected year-end bonus from your employer are all great options to start saving for a down payment on your new home purchase.
2. Take advantage of low-down or zero-down mortgages
Save money for the 20% standard deposit could be an uphill battle. Many first-time homebuyers opt for a FHA loan because they only require a small down payment and have less stringent credit requirements.
Jason Gelios, Real Estate Agent at Community Choice Realty and Creator of The AskJasonGelios Real Estate Show, says, “Even with limited savings, first-time home buyers can also benefit from low-to-zero mortgages, and use the money to cover upfront costs like home appraisal and inspection. “
While it is generally true that the best mortgage rates and terms are reserved for applicants who have a good credit rating and history and can make the 20% down payment, take advantage of down payment mortgages. low or no can help you make a home purchase without a big expense. cash in advance.
In the meantime, work on your credit score to take advantage of the best interest rates and compare all your mortgage options byvisit Credible to find the best rates and lenders.
3. Consider a credit card with balance transfer
If you have large balances on high interest credit cards, you might consider transferring them to a credit card balance transfer. These cards generally offer lower interest rates during a promotional period. You might also get better terms than with your current credit cards, and you can consolidate your credit card debt to simplify your monthly payments.
Be aware that you may have to pay a balance transfer fee upfront and you may end up with a higher interest rate after the promotional period ends. Your credit rating could be affected due to the credit card approval process.
Don’t find yourself having to pay more interest. Instead of, visit an online marketplace like Credible to view multiple 0% APR balance transfer credit card options at a time.
4. Use your retirement plan
Orlando Miner, CCIM and CEO of Miner Capital Funding, recommends using your retirement 401 (k) as part of your overall plan. “Retirement plans are a great way to get money back for your mortgage, and many plans have a no-penalty option only for mortgages. But keep in mind that you can only borrow up to $ 50,000 or half of the accrued balance (whichever is less) from your 401 (k) account. You’ll have to repay the loan with interest, and some 410 (k) require repayment within five years.
5. Automate your high yield savings account
A high yield savings account typically pays higher interest than a traditional savings account. You can reach your savings goal by creating a high-yield savings account and making sure that a portion of your paycheck automatically goes to that account, so you won’t be tempted to spend it elsewhere. You might even consider opening (and automating) a separate savings account just for the purpose of saving money for your new home.
Before opening an account, visit Credible to earn more money and find a high yield savings option that best suits your goals.
6. Find a roommate
If you’re paying your rent on your own, you might want to consider getting a roommate. That way, you can cut your monthly payment, utilities, and other recurring expenses in half, and put the money you saved in an interest-bearing account. Save $ 1,000 per month and after one year you will have $ 12,000 in the bank plus interest earned.
Again you can check high yield interest rate and savings account options that match your situation in the Credible Market.
7. Reduce the non-essential
One of the best ways to save for a mortgage is to consider cutting back on daily expenses, like gym memberships, magazine subscriptions, streaming services, or dining out.
Justin Dwyer, co-founder of Cambio, a ‘second chance’ digital banking app, says, “If you stop at one place for lunch at the wheel every day, take a different route so you don’t see this storefront. You’re less likely to feel an urge if you don’t see the thing you want the most.
Since buying a home is expensive, figuring out where you want to live, what type of home you’re looking to buy, and in what price range, you can better determine what down payment you can afford and what your savings will be. future mortgage payments. .
Speak to your financial advisor as you prepare to save money for a home. Credible can also put you in touch with experienced loan officers.to get answers to all your mortgage questions.
Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at [email protected] and your question may find an answer by Credible in our Money Expert section.