For most people, buying a house is the largest purchase they’ll make in their entire life. That’s understandable, seeing as the median sale price for a house in the first quarter of 2020 was $327,100. And if you’re most people, making a purchase that large takes careful planning and a lot of saving.
So what’s real estate tips can help you start saving to buy a house? In this article, we give you 7 simple steps on how to budget for a house.
- Know How Much You Need in Your Piggy Bank
Knowing how much you need to save up is where budgeting for a house begins. Having a number in mind creates a tangible goal that you’ll be able to work towards.
So what is the average cost of the type of house that you’re looking to buy? How much can you afford? Are you buying the house outright with cash, or obtaining a loan from a bank or financial institute?
If you’re buying with cash, then figuring out the amount needed to save comes down to how much you’re planning to spend. Taking out a loan requires a bit more consideration as there are different types of loans—conventional, FHA, VA, etc. Each type of loan requires different amounts of down payments as well as other additional fees like mortgage insurance or sending earnest money.
2.Know When You Want to Buy
Having a time frame of when you want to buy helps you figure out how much money you’ll need to save each paycheck. Figuring out these increments will give your budgeting structure and allow you to meet smaller incremental saving goals.
Take the total amount of savings needed, and divide it by the number of months you’re giving yourself to save. The quotient is how much money you’ll need to save each month.
3.Know How You Plan to Save
When figuring out how to budget for a house you’ll, where you put your savings will affect how fast your savings builds up. Putting money away in a savings account is the simplest way to save. Other ways might include investing in low risks stocks or a CD.
4.Cut the Fat From Your Current Spending
Taking a look at your spending habits will show you where your money is going. If you’re going out to eat every night or paying for a number of subscriptions that you don’t really need, it might take you longer to put away the money needed to buy a house.
5.Automate Saving Drops
If you receive direct deposit paychecks, then you can automate deposits into your savings account with your bank. Allow automatic deposits to be made from each paycheck to ensure that you’ll be putting away money each paycheck.
6.Save Your Lottery Winnings
Ok, so we don’t recommend purchasing lottery tickets to help save for a house. However, if you receive a bonus or commission from work, or maybe sell an old car, use that windfall of money to fatten your savings.
7.Regularily Evaluate and Adapt as Need
Life happens to us all. Sometimes unexpected things take place that slows us down—or speeds us up—from reaching our goals. Periodically evaluate your budgeting plan and make adjustments as needed without losing sight of the bigger picture.
How to Budget For A House In 2020
If you’re budgeting for a house in 2020 and looking to finance, the good news is that interest rates on loans are low. Call your bank and see what types of loans and rates are available to you in order to determine how much money you’ll need for a downpayment.
If you found this article useful, check out our blog for other helpful financing tips.