One of the biggest barriers to becoming a homeowner is the down payment, but the good news is that the traditional 10% to 20% required down payment may not be something that you need to fear at all. Actually, you may have other options for purchasing a home. No matter what you do, though, you do need some money to be able to buy a property.
Here are some great tips for how to save up some cash so you can make the purchase when you’re ready:
1. Set a target goal. Once you talk with your lender to find out what you qualify for, what monthly payment you’re most comfortable with, and what options you have moving forward, you’ll know approximately what you’ll need for a down payment and closing costs. Use that information to set a target goal for your savings.
2. Reassess your spending habits. Take a look at your regular expenditures and see where you can make any cuts. Here are some common monthly expenses to reconsider:
- Cable packages
- Gym memberships
- Grocery bills
- Eating out
3. Sell some of your unused/unwanted possessions. Websites like Craigslist, eBay, Facebook, and Amazon make unloading unnecessary items easy, and it’s a good way to pad your savings on your way to your target goal and to get rid of your extra stuff. One man’s trash is another man’s treasure.
4. Consider downsizing your apartment. Renters who make the switch from a 2-bed, 2-bath apartment to a 2-bed, 1-bath apartment, or even a studio apartment, can really save a lot of money as they prepare to become homeowners. You’ll have a little less space, but that also means you’ll save on your heating and cooling costs, which, here in Arizona, can be a big deal. It’s a short-term solution to a long-term goal, and you’ll get all the space back and more when you’ve purchased your home.
5. Find a side job. Taking on part-time work, like delivering pizzas in the evenings or becoming an Uber or Lyft driver can help you earn extra cash to meet your target goal.
6. Open a high-yield savings account. If you’re saving or earning more with a part-time gig, don’t just put that cash under the mattress or put it in your normal checking account—put it somewhere where you can actually accrue a little bit of interest on it. This will help you in the long run, and since now is tax season, putting your refund in a high-yield savings account to let the interest accrue is a great idea.
If your goal is to break out of the rental system and become a homeowner, consider making these or similar slight changes to your lifestyle so that you can save up for the costs. You’ll thank yourself when you close on your home.
If you’d like a few more suggestions or if you have any questions, feel free to reach out to me. Let me know how I can be of assistance to you.