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!
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