The
process of purchasing a first home is a lovely endeavor which, however, poses
certain immense financial responsibilities. Buying a home, staking this down
payment, mortgages and expenses might sound like a huge task but it is actually
very doable. The following ultimate guide will guide you through the process of
saving for your first home and kicking starts the process to home ownership.
Set a Clear Savings Goal
As
you prepare to save, find out how much would be required to make the down
payment. Depending on where in the country you live, you will need at least 20%
of the home’s purchase price in order to NOT have to pay for PMI. However, some
of the loans that one is able to access are those within the down payment of 3-5%.
Take your desired area and look for the prices of homes at the market and then
determine what a 20% (or the targeted percentage) of the price would be.
For
instance, there is closing costs, moving expenses, improvements costs among
other costs that a new home may need. This will give you a clear target on how
much you want to save including the down payment and other extra expenses.
Create a Dedicated Home Savings Account
You
also need to maintain a high-yield savings account for your home savings
different from where you have been saving for business or any other endeavor.
By maintaining this cash in a different account from your regular checking
account, you are limited in your ability to use the money for any other purpose
other than making payments on your home. A high-yield savings account will also
allow your money to grow with interest while you save. Make it by monthly or as
a matter of preference, make it a monthly carry out into this account so that
you can afford it without the need for direction.
Budget and Cut Unnecessary Expenses
Look
at your budget now and find out where you can minimize your spending to save
more for your home. Try and save a few months from your spending to see where
you are likely to be spending too much. Perhaps its coffees bought for work, a
monthly magazine that you didn’t actually read much of the material in or those
TV series that you consistently binged on but were just not that interested in.
Savings made in these areas may seem insignificant over the short term, but can
equal big bucks over the long haul.
After
you have identified all the non-essential expenses then the amount returned
should be automatically transferred to your home savings account. It does not
matter if it is fifty cents extra a day, every dollar counts on.
Increase Your Income
Reducing
expenditures is one thing but it is only a half of the story. To save faster,
they want to know how to make more money. This could mean having to get a
second job, or applying for a salary increment practice for a better paying
job, or doing freelance jobs in your spare time. You can also sell items that
are of no use and list your room in the popular site Airbnb in case you have an
extra one. With every dollar earned, home ownership becomes closer - and that is
why unfocused anger is deadly.
Take Advantage of Government Programs
First
time homebuyers are usually in a position to access several programs in order
to lower the amounts that you will be using to pay your down payments. Search
for down payment assistance or any grant or low interest or mortgage provided
by local or national government. For instance, the FHA loans that are offered
in the U.S. enable the buyer to pay a down payment of only 3.5%.
Check
what is out there and on your eligibility for any help you can get. Some of
these programs can also reduce the cost of the home and enable you to save more
within a shorter period.
6. Avoid Lifestyle Inflation
When
you are climbing the corporate ladder and getting promotions and a better
paying job, it becomes very easy to get trapped in to lifestyle inflation. He
instead observes that instead of changing your car or suite or clothes with a
raise or bonus one uses the additional money to increase his home savings. It
can also help to make saving much faster and bring the timeline much closer
than you initially might have estimated.
Invest Wisely for Long-Term Savings
If
you are some years to ten years away from purchasing a home you can put part of
your saving in low risk instruments. Other products such as a certificate of
deposit or money market account reap higher yields than a standard saving
product without much exposure to risk. One is to make sure that you are not
putting all your money in equities to the point that you no longer are able to
get a house because your investments have tied down all your money.
Monitor Your Credit Score
Credit
score is one among the most important factors that determine the interest rate
for the mortgage that you’ll get when applying for it. When choosing a credit
score, the one with the lower rate is less expensive in terms of charges, which
cost you thousands of currency notes throughout the period of your loan. You
should first check this credit report for the mistakes and, second, work to pay
off the credit that you already own. When paying your bills always makes sure
you are timely so that your credit utilization ration also improves.
Stick to Your Plan and Stay Motivated
Well,
an amount towards the house may take some time in accumulation but the best
thing to do is to always be saving and aiming for the house. Simplify your
targets on ways you can save your cash and make sure to acknowledge the small
achievements in this case. It doesn’t matter if it is GH¢500 or GH¢5,000; each
amount brings you one step closer to owning a home you desire.
Perhaps
you may want to use vision board or a savings tracker to encourage yourself.
Knowing that you have a goal is one thing, but partly picturing your dream home
and the goal you are working to achieve will give a clear sight.
Some
of the things you need to have for your first home are as follows:; Whenever
you are planning to save for your first home, it comes with a number of
principles which entail planning, discipline and compromise of short-term needs
and benefits for long-term gain. Having a focused objective, reducing your
expenditure, finding more ways to earn money, and utilizing what you have
access to will see you owning your dream home. Stay focused, follow your
strategy and, all of a sudden, you are opening the door to your new house!
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