If you have made the decision to purchase a home this year, it is important that you take the necessary steps to get your finances in order before you actually go too far into making that commitment. After all, money is a huge part of buying a home, and you want to ensure that you are able to invest in a home successfully since so many fail at it. Here are a few tips that will help set yourself up for financial success when it comes to organizing your finances and funding your home purchase:
Determine How Much You Need to Save
Your first step in saving is to figure out how much you need to save. While you don't know the exact cost of the home you are going to buy, you can determine a ballpark estimate. Remember, you usually need around 20 percent of the purchase price of a home for a down payment. Then, you can break that amount down by a certain number of months. For example, if you need $25,000 by the end of the year, you know you will need to save roughly $2,083 a month.
Create a Savings Account and Set Up an Automatic Transfer
It may be a good idea to create a separate savings account to put your down-payment money into. This way you know it is safe and sound and you won't have easy, 24/7 access to it inside your home or from your regular bank account. In addition, you should consider setting up an automatic transfer when you get paid. This means that once your paycheck hits your bank account, a certain amount will be automatically sent over to the savings account before anything else is ever done. This ensures that you never forget to save money for your down payment.
Adjust Your Budget to Minimize Expenses
Take a close look at your monthly budget and see if there are any expenses that you can get rid of. Do you really need that coffee from Starbucks every single morning? Probably not. Why not try limiting those coffees to just Mondays or Fridays? That would save a ton of money each week. Take a look at your living expenses and bills as well. You may be able to get discounts or switch to a lower-priced plan (like with your cable provider). Remember, every little bit counts and will be well worth it in the end when you have the home of your dreams.
When it gets closer to time to needing to get a loan, speak to a mortgage lender about what documentation they will need from you. This will help ensure that you are one step ahead and will speed up the process.Share