You want to be a homeowner but bills are making it seem impossible? Buying your first home is one of the biggest life decisions and financial expenses you will have to make, and it is important that you should be prepared by knowing exactly what you are getting into. Here are the five steps you should follow when saving to buy a home.
1) Start Saving Today!
Of course, you already know this, but I’m telling you again that building up your savings by starting today is the first step. Do not procrastinate and resolve to start tomorrow, start today. I know this sounds difficult because funds are not really available much, but funds do not have to be huge for you to start saving.
Saving money is a gradual process that takes time so you should start today because a huge sum of saved money does not happen overnight.
2) Save for the Unexpected
Most people when saving for their first home make the mistake of saving towards a down payment only. This should not be so, and several experts have suggested that intending homeowners should always have extra four to ten months of emergency savings when considering buying a home.
While it is advised by financial experts to always have living expenses emergency savings, it is also important that the emergency savings for the future home to be bought should be different from the family living expenses emergency savings. Doing this will help your finances.
This emergency savings for the future home would serve as an emergency fund in case something goes wrong after you have purchased the house and you can fix it. It would not do to be poor after purchasing your home. However, this might not be an issue if you are purchasing a newly built home and everything is new and under warranty.
3) Get a Part Time Job
When saving up to buy your first home you could take up one or two extra jobs and work a few more hours. This would aid you to save easily and faster.
4) Cut Costs by Limiting Luxuries and Creating a Budget
The biggest obstacle to saving money is habit. Although it is quite difficult, you should create a budget and stick to it. Live within your means and cut down on luxury after taking your situation into consideration. Your situation being that you are saving towards buying a home.
After paying your bills and making expenses exactly as you have outlined in your budget, you should deposit any funds left over into your savings account. You should also limit the use of your credit card and take further steps to help you save like taking your lunch to work, skipping cable for a period and even limit shopping.
5) Be Knowledgeable
When you are ready to purchase your home, you should look around for great deals and Consult a financial advisor in order to get a smart purchase. Also, understand all the terms and figures.