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How to Save Money for Your Dream Home

save moneyThere is a beautiful saying by Robert Montgomery: “A house is made of walls and beams, a home is built with love and dreams”.

It really does take a lot of dreams and love, great excitement and effort, as well as many sacrifices to save money, in order to achieve a wonderful goal of having your own dream home.

If you are still debating deep in your heart and trying to weigh all pros and cons of buying versus renting, you will find the answer in your heart.

In spite of the uncertainty of the current housing market and fewer loan options for home buyers, we all well know that there are a lot of great benefits of owning a home and just to name a few: 

1) Homeownership Pride

Homeownership Pride is not just a purchase but a long-term commitment that will sure bring you pride.

2) Home Appreciation

Buying your dream home now  and taking advantage of not only low home prices, but also historically lowest mortgage rates will definitely become a perfect recipe for a home appreciation once the market rebounds.

3) Property Tax and Mortgage Interest Deductions

If you home is your main residence, you get a very nice property tax deduction as well as mortgage interest deduction every year which can make a huge difference on your taxes and save money for many years to come.

So, what is the best way to save money to get to this so much desirable goal of owning a dream home?

There are 3 crucial steps to follow to create financial stability in order to become a proud homeowner:

1) Pay off your Debt and Reduce your Spending

a) Update your monthly budget to establish your total control over finances and cut back on unnecessary expenses.

b) Look through all your bills and discover the ways to save even more money on your car insurance, monthly bills and random purchases etc.

c) Stop eating out and buying items you don’t need.

d) Find a part time job if needed and save all the extra money from it.

2) Save Money Every Possible Way

a) First, write down how much money you bring home after taxes.

b) Secondly, figure out how much money you spend on bills, children, entertainment, etc. to calculate what you can save a month for the biggest purchase of your lifetime. This amount will be your starting point.

c) Get ready to save 20% for your down payment  (to avoid paying mortgage insurance) and a few thousand dollars for closing costs.

Let’s say you are planning on buying a $200,000 house. That means you would need to save about $40,000 for a down payment and 3-4% for closing costs which is $6,000-$8,000 for a total amount of about $46,000-$48,000.

3) Choose Smart and Safe Investing Techniques

a) Open a saving account in a bank where you don’t have a checking account to avoid the temptation of money transfers. If you are budgeting wisely, you should be able to save up to 15-20% of your pay each month. Once you have several thousand dollars in your savings account, proceed to the next step.

b) Research and pick the right form of investment.

There are various forms of investment options like bonds, treasury bills, notes etc. protected against loss or forfeiture. They have lower interest rates with longer terms.

With this kind of investments you definitely have the benefit of safety and protection from risk of losing your hard-earned money; just like you have when you keep your savings in your bank that offers FDIC insurance.

Whether you decide to invest your saved money in fixed rate bonds to ensure longterm savings or other forms of investments, always keep a close look at your investments.

c) When choosing the best suitable form of investment, make sure you consider the following factors like: age, income, time frame and, most importantly, risk.

d) Be consistent with your goals and take every opportunity to save money and make it grow. This way every single day will get you closer to the goal of having your own home, sweet home.

What are your expert tips on how to save money  for a dream home?

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We hope to see you again. Check back later to find out more on creative ways to save money, make money, get out of debt and budgeting tips. There is so much more to come!

Money Saving Tips:

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***Image Source: Dream Home

 

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4 Responses to “How to Save Money for Your Dream Home”

  1. Jill Says:

    It took us 5 years to save money for our dream home. We both had 2 jobs for a while but it felt so good when we finally could buy one. It was a great sense of accomplishment.

  2. Elena Says:

    Hello Jill, I did exactly same thing. Worked 2 jobs and saved money and got a wonderful place I can call my home. It’s a great feeling!

  3. James Molet (SavvyJames) Says:

    While there may be circumstances when home ownership is not practical, for most people, in most situations it outweighs renting for the reasons articulated.
    James Molet (SavvyJames) recently posted..Post College: Getting StartedMy Profile

  4. Elena Says:

    You are absolutely right James! There is nothing like homeownership pride that gives you a sense of accomplishment. It’s nice to hear your feedback on this James! Have a great day!

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