Today’s market for first time homebuyers is not as encouraging as in the past. Many of the people who would be purchasing homes are also dealing with high student loan debt. Don’t despair though, there are still ways for you to save to get your first home.
Budgeting is not fun but anytime a large purchase is warranted, it only helps to put a plan into place. As the saying goes, if you fail to plan, you plan to fail. Let’s review some ways to get to a successful outcome.
One of the first things we highly recommend at Scates Realty and Investments in Orlando, Florida is that you get a copy of all of your credit reports. Sometimes one will have information that the other may not so getting them all allows you to have a full picture. You can get a free copy of your credit report and it will help you be a more informed consumer.
Next, decide on the must haves, the “I’d like” and the what a waste of money items you want in your home. This will help you to figure out how much you should expect to pay for your new home. If you like a lot of luxury amenities versus just a great kitchen, this could really make a huge difference in the costs. Also, get an idea of the area of town you would like to live in and learn what the prices in that area happen to run.
Once you have an idea of what you want in a home, its time to see where you really sit financially. Many mortgage professionals would love to potentially earn your business. Simply speak with your chosen professional and have them look at your financial reality to let you know where you are starting. Depending on the loan programs they are offering, you will know based on what you earn, your credit and a few other factors, how much house you can truly afford. Once you have this picture, you can now realistically decide how much you need to save.
Now the fun begins, ways to cut back from outside spending to bolster your “I’m getting a new house” fund.
Hopefully your plan is to be put into place for a few months up to a year. Remember that the market is always moving so you may find a home you love today in your price range but if the area you are considering is being upgraded, remember prices are subject to change.
Forgoing a fast food meal, an expensive cup of coffee and buying things in bulk or on sale can help you put money toward your dream home. At Scates Realty & Investments, we also recommend establishing weekly spending budgets. No one wants to be miserable while they save for a home. If you normally spend $100 a week on fun things to do, cut back to $50 and put the other $50 into the savings account for your home. Remember the more you have, the lower your payments will be or the more features you can afford.
Making sure to avoid buying things on credit but paying off debt will be helpful. Each time you purchase something on credit, it changes your debt to income ratio and if those numbers are not favorable, you will miss out on financing. Your debt should be 36% or less than your earnings. If it is higher, you can still find financing but your interest rates may be higher. Why pay more than you should?
At Scates Realty and Investments in Orlando, Florida, we are a little unorthodox and many will say that if you want to earn more income, to get a second job but who has that kind of time and energy? As feisty entrepreneurs, we recognize there are other ways to earn income. Capitalize on a hobby, sell things on Craigslist, buy things in bulk and sell them to your neighbors for less than they can get them at the store. Yes, we are penny pinchers and have saved a time or two for our own homes.
While we don’t offer a comprehensive list of ways to help you save for a home, we always have suggestions. We encourage you to Pop In The Pink door or give us a call at 352-404-8960 to discuss your options. We are always happy to help!