As we know, home prices have risen quickly recently, and many people assume that they need to save for many years before they can invest in a home purchase.
That may not be true!
Here are a few tips that can get the process going and make that goal attainable much more quickly:
- Take advantage of automation.
First and foremost, automating your weekly, biweekly, or monthly savings is a critical strategy to reaching your goals. By putting your savings contributions on autopilot, whether through a direct deposit or using a tool like recurring transfers, you can ensure consistent growth to your down payment fund without having to think about it.
- Find areas to freeze spending.
When saving for a house, your budget might need a little adjusting. Review your current expenses and find areas you can lower or pause your spending altogether. That could mean cutting back on takeout, for example, or not buying new clothes for a few months. And remember: This isn’t a permanent change, just a temporary sacrifice in exchange for your future home.
- Seek a raise.
One of the best ways you can increase your savings is by boosting your cashflow. If the timing is appropriate, and you feel confident in your performance on the job, consider asking your employer about opportunities for advancement or negotiating a raise. Then, if you receive a salary boost, direct your new income straight to savings – you won’t even miss it!
- Sell items you don’t use.
Whether you have kitchen gadgets, old toys, furniture, clothes, etc., it’s easy to sell items in good condition to make extra cash. Declutter your home, then head to a thrift shop, host a garage sale, or post your stuff on sites like eBay, Poshmark, or Facebook Marketplace.
- Explore special programs for homebuyers.
Many local and national programs exist to provide qualified first-time homebuyers with down payment assistance or affordable rates. For example, Fannie Mae’s HomeReady Mortgage program allows buyers to make down payments as low as 3%, and the Federal Housing Association (FHA) offers loans that require only 3.5% down.
- Pause or tap into retirement savings.
If you’re contributing a significant portion of your income to retirement savings, you might temporarily reduce that amount and redirect it to home savings for a few months. First-time homebuyers can also tap into an IRA without penalty up to $10,000 for a down payment. However, you should consult a tax professional before withdrawing retirement funds.
- Use windfall money.
Child Tax Credits, tax returns, holiday bonuses, a check from grandma and grandpa: Send these funds straight to savings. If you’re lucky to receive windfall money, it’s a great way to give your down payment fund a major boost without having to tap into your regular budget.
Of course, if you or someone you love wants advice on how to set up the best strategy, I’m only an email or phone call away!
Please drop me an email or call if you have any questions – or someone you know is in need of expert advice. I love to help those you care about. If you have a referral please click the button down below. Your referrals are the heart and lifeblood of my business.
Mission San Jose Mortgage
2111 W. March Lane, Suite B100
Stockton, CA 95207