There are plenty of perks to being a renter; you don’t have to pay property tax, the maintenance of the property and dwelling are not your responsibility, if something breaks or isn’t working the way that you would like you just call for help. It’s a pretty good set-up, right?
Yes, until you remember the one thing listed in the negative column – and, it’s a big one. When you’re a renter, you’re not gaining any equity in the home that you’re paying to live in. In other words, you’re paying rent every month and you will never see a dime of that money in return.
Many people feel intimidated by the prospect of purchasing a house – especially when it comes to the thought of saving the cash for the down payment.
Thankfully, there are many simple steps that you can take to start saving money to purchase your new home – even if you’re also paying rent.
Set a goal
To set a goal of how much money to save and at what interval, you first need to know how much house you can afford. You can determine this by using an “affordability calculator”, which you can easily find online by doing a simple Google search.
Once you know how much the total amount of the loan you need will be, you can put together a savings plan that outlines exactly how much money you will save on a weekly or monthly basis.
From there, you can determine how long it should take to save the total down payment that you will need and setting your goal from there is simple.
I will have $XX saved by MMDDYY to use as a down payment for my $XX home loan.
Set a budget
If you’re not sure where to start with setting your budget – it is recommended that you gather your bank statements from the last three months and look over them closely to see where you spend your money.
You can set up a spreadsheet that is similar to an envelope budget and add enough money to each cell of the spreadsheet for that corresponding bill.
Make sure to budget for any holiday, dinners out, extra curriculars, etc. If it’s not on the budget – then don’t spend it. Once you have allotted enough money from your paycheck to cover everything that is on your spreadsheet – the rest goes into savings.
Cut the cable
If you haven’t done so already, look into what the cost savings would be if you canceled your cable TV service and just used streaming services like Hulu and Netflix. The money that you save on your cable bill could go directly into your ‘down payment’ savings account.
Pay less rent
If you’re serious about saving enough money to purchase a home, consider moving into a smaller apartment to cut the cost of the rent that you’re paying each month. With that goal in mind that you set from above, living in the smaller space would be temporary and the extra money you save in rent will get you to your goal that much quicker.
Make more money
Even if you have a full-time job now, it might not pay you enough to really get to your down payment goals in the timeframe that you want. In that case, consider taking on a side gig or a second job. There are plenty of options for things that you can do remotely from home or, you could even take a job part-time at night after your “day job”. Again, it’s temporary and only meant to get you to your down payment goal faster
These are just some of the ways that you can make the dream of home ownership a reality. It will take some discipline and sacrifice but, all of that is temporary, and, when you finally do own a home, you can rest-assured that the money that you are paying towards the mortgage each month is an investment.