Having a hard time saving for a home investment? Check out these tips that might help you to start saving for your next dream home investments.
Below are 3 tips to start saving for a house:
Simulate Mortgage Payments
The problem with all the methods mentioned above is that they do not take your financial habits into account. So what is the best way to answer this question: How much house can I afford?
Personally, I think the best answer is to simulate your home ownership experience. Take your mortgage for a test drive! Say you’re paying $1,300 a month in rent today, and you’re looking at a $1,500 monthly mortgage payment. To be conservative, we’re going to add a 20% premium on top of the mortgage to account for homeowner’s insurance, real estate taxes, private mortgage insurance (PMI), maintenance, and additional utility costs, for a total of $1,800. Source: Moolanomy
Save Less for Retirement
You might be well on track to reaching your retirement goals. If that’s the case, maybe scale back. If you’re matching your 401(k) up to the 6% company match (or however much your company matches), put the rest of your money into your house fund. But don’t stop putting some money aside for retirement. Saving for your later years is more important than saving for a home, so don’t take money from your retirement for your home. Source: Investopedia
Save Your Cash
Requirements for getting a mortgage loan often change, and if you are considering applying for a home loan in the near future, be ready to cough up the cash. Walking into a lender’s office with zero cash is a quick way to get your home loan application rejected. Mortgage lenders are cautious: Whereas they once approved zero-down mortgage loans, they now require a down payment.
However, down payments aren’t the only expense you must worry about. Getting a mortgage also involves closing costs, home inspections, home appraisals, title searches, credit report fees, application fees, and other expenses. Closing costs are roughly 3% to 5% of the mortgage balance – paid to your lender before you can seal the deal. Source: MoneyCrashers
Gary Wong, MBA
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