7 tips for saving up for a home in the Triangle
If you’re a first-time homebuyer, it may seem daunting to save up for a down payment to get into your first home. Often, buyers hear they need 20 percent of the price of a home before banks will agree to lend. And with the median sales price of a home in the Triangle currently at $400,000, that would require $80,000 in the bank. The good news, however, is that isn’t necessarily true. A down payment can range from zero down and as little as 3 percent, depending upon the type of loan for which you qualify.
If you’re ready to make the move toward homeownership, the following 7 tips can help you begin planning and saving so that reality can get here even faster. Here is where you should start.
Talk to a local mortgage lender for advice
Often, the best place to begin is by talking to a mortgage lender. Going in for advice will help you get a clearer picture of how much money you’ll need before you get too far down the lending path. Getting pre-approved from a trusted local lender like North State Bank or Towne Mortgage of the Carolinas will give you your best chance of approval for a home. Plus, these lenders have partnerships with organizations like the North Carolina Housing Finance Agency, which provides $15,000 for down payment assistance for first-time buyers. A local lender can help you plan before your home search even begins.
Follow a budget
Nerdwallet recommends following the 50/30/20 rule for savings. Fifty percent should go toward the things you need, like housing, food, and transportation. Thirty percent should be budgeted toward wants like entertainment, travel, and dining out. That last 20 percent should be what you save each month. Talking to your mortgage lender can help you work toward that reality and make determinations about what is possible based upon your unique situation and the home you’d like to purchase down the road.
Get a roommate
A quick way to save costs is to find a roommate who can split costs with you. If you find a person you trust who can share the costs of an apartment, utilities, and groceries, it’s a quick and easy way to start tucking away the funds you now share so you can save for your home even faster. As rental rates have risen post-COVID19, it may be a way to begin reducing your debt overall. If you don’t enjoy having roommates, keep in mind that it can be a short-term way to make a big impact as you look to save money.
Skip vacation
Vacations are a great way to recharge and rejuvenate. But if you’re anxious to buy a home, you may want to reconsider taking that vacation and instead tucking the money away toward your future home. Instead, consider doing something closer to home, like taking a spa day or enjoying dinner with friends. If vacation is still high on your priority list, look for ways to save costs while you travel, such as traveling in the off season, cooking meals instead of dining out, and looking for free things to do.
Cut out costly habits
Are bad habits preventing you from saving the way you want? You may want to look at ways you can save money by just cutting out those habits. Maybe you have a habit of grabbing fast food on the way home from work. Or perhaps you know you want to cut back on a habit like smoking, drinking, or expensive coffees. If you can find ways to make those habits less frequent treats, you can start tucking those costs into savings easier and rack up your savings even faster.
Pick up a side hustle
If you really want to stash away extra cash, a side hustle or freelance job may be the way to go. In the age of Uber Eats and Door Dash, you can deliver food on your schedule and make extra cash to tuck away to save. You could do the same by delivering groceries through Instacart. If that’s not enough, there are other side hustles you can take advantage of, such as baby sitting, taking online surveys, and pet sitting. A little creative use of your time can go a long way toward helping fill your savings account for a home purchase.
Automate your savings
For many people, savings doesn’t happen at all unless it becomes automated within your day. There are a few ways you can automate your savings. Monthly automatic transfers can help you forget you are even saving, and it takes the stress out of budgeting for it. Some banks will round your spending up to the next dollar and tuck it into your savings account. You may even want to create a separate savings account meant just for your homeownership goals. Then, you can sit back and watch the savings grow.
Final notes
With just a few simple tricks and putting the focus on saving instead of spending, the dream of homeownership may be just around the corner. Don’t forget to start with a local lender to get a clearer picture of what you need to save and what your current financial picture looks like. Before long, you’ll realize your first home is well within your reach.
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