Buying a house is always exciting, but it’s never as easy as you’d hope it would be. There are a lot of things to take into consideration and your finances are the most important factor. When we’re young, we dream of the homes we’d like to live in as adults, but we still don’t have any concept of money. This is why we often end up disappointed as adults when we realize how much things actually cost. To make sure you can afford your new home and the mortgage that comes with it, it’s essential to start saving in time. It’s going to be hard work, but these tips will help you get there as painlessly as possible.
1. Research the prices on the market
First thing’s first- if you want to start saving for your new house, you’ll need to know the range of prices on the market. This will give you a good idea of the amount of money you need for the neighbourhood and the size of the house you want. If your budget is more important than the ideal location, you can always look for homes in cheaper neighbourhoods.
A good idea is to look for rising neighbourhoods, as the houses there are usually cheap now but have the potential of increasing their value over time. Look at this as an investment that’s bound to pay off in the long run. You can even consider moving towns or moving to the suburbs if the house of your dream size is cheaper on that location.
2. Set up automatic bank transfers
If you want to have a sound financial strategy, you’ll need to make the process automatic. It’s much easier to complete your payments on time when you don’t have to do any of the work manually. When you’re as busy as yourself, it becomes hard to keep track of what bills you paid and what you didn’t, as well as what you’re still supposed to pay each month. Let’s face it, we all have plenty of other subscriptions we need to pay monthly on top of the utility bills.
Your account should have the option of setting up automatic transfers, so you won’t have to even go to the bank to complete the process. Transferring the money is even easier if you have a high-yield savings account next to your regular one. This way, you’ll never have to worry about spending the money you meant to save or having below the desired amount you wanted to save each month. The money will be transferred to your savings account automatically as soon as it’s in your account and you’ll be one step closer to your dream home.
3. Find a good contractor
There are plenty of companies out there that could help you build your dream house. Your job is to do some research and find the best and most experienced home builders there are. A company that’s worth your time will have a lot of options for you to choose from and will openly discuss the prices of the project with you. Don’t choose someone who keeps telling you that you’ll talk about the price later, because companies like these usually stick you with hidden costs.
Also, it’s a good sign if the company wants to give you a free quote or if they’re willing to put things on paper. It’s a good idea to ask for discounts and what you can do to make things cheaper without sacrificing much of the quality, too. If you’re at the right place, the contractor will have an answer to all of your questions and be open to fitting the project into your budget.
4. Figure out your down payment
If you want to take out a mortgage, you’ll need to figure out a down payment. In most cases, you’ll need to give a 20% down payment when taking out a mortgage. This amount may seem high, but it helps you avoid paying extra on your mortgage every month, especially if you’re borrowing money from the private sector.
Private mortgage insurance can cost between 0.3% and 1.2% of the principal balance of the loan. This amount is paid to the lender of the monthly mortgage payment. However, most people find it impossible to save such an obscene amount of money for a down payment. In fact, the younger generation is able to save up to 8% on average. That’s why it’s important to start saving on time and be patient with when you’re going to buy your house or find a good down payment loan.
As you can see, it’s not impossible to save for your dream house. You have to be realistic about your options and what you can afford, but if you start saving on time, you’ll have a lot more options to choose from. These tips will help you find the best home for your budget. We’re confident you’ll find the happiness you were looking for when you first move in and we just know you’ll be able to save as much money as possible to make your dreams come true.
Also published on Medium.