When buying a house, a buyer is probably making the biggest investment of his or her life and must know how to come up with a serious down payment. On top of that, most buyers will need to spend a substantial amount of money moving and preparing the new house. Sadly, many potential homebuyers do not know how to save money to buy a house. Instead of worrying, the buyer of a house must know how to save up money for their down payment and initial move in costs. Here are four tips for anyone wanting to know how to save money for a house.
We all have some old unused or unwanted stuff lying around that is just collecting dust. Selling it is a quick and easy way to make some money fast. When selling old and useless stuff, one will make money and avoid having to move the items to the new house. When having a garage sale, many people surprise themselves as it is easy to make a few thousand dollars with a well-run garage sale. There are also many online sources to help you sell things fast like Craigslist or eBay.
Now, one should not necessarily raid their retirement accounts to afford their dream house. Rather, a buyer should research the possibilities of getting a loan from their retirement plan. Oftentimes, a buyer can borrow money from a 401K or 403B plan. Keep in mind that with a 401k Loan or 403B, the borrower must pay the loan back; otherwise, he or she will run into serious problems. Finally, if the buyer has an IRA, he or she must keep in mind that it is possible to withdrawal $10,000 from a Roth IRA without having to pay the money back.
When thinking of how to save money for a house, many potential buyers seek out ways to make more money. Ever think about how to make money on the side? A potential buyer can make extra income with a second job or starting a part-time business. Even when working a few hours a week, one can add thousands of dollars into their bank account within a few months.
Cut living expenses:
When cutting living expenses, one will see their savings add up quickly. A household should sit down together and develop a serious money-saving plan. Ideally, all members of the family would take part in coming up with money-saving ideas. When coming up with a serious budget the family should start out trying to lower their major expenses such as car payments and grocery bills, but then start looking at all of those little things that add up like eating out. It is possible for a family to save hundreds of dollars a month just by lowering a few major expenses and changing their money spending habits. Sometimes all you need are some tips to save money to get you going.
When saving money to buy a house, one must realize that they will need to make sacrifices. In the end, when a buyer has a sizable down payment, he or she will feel comfortable in their house and enjoy lower payments. Not only that, but with a large enough down payment, the owner will avoid costly private mortgage insurance. Once a potential buyer learns how to save money to buy a house better, he or she will have no trouble saving money and coming up with a down payment.
Author: KC Beavers
KC Beavers is a semi-retired entrepreneur. The subject of personal finance has always fascinated him. In an effort to not bore those around him with all his love of personal finance as much he has come here to bore all of you instead.
@genxfinance "Cut living expenses" Thats what I did. For two years my wife and I lived very very lean to put 20% down. Good advice!
Good post! I would do all I could to not only earn some more money, but also look for ways to cut some expenses and save the combination. If you don't use it on the down payment, you'll be sure to use it on stuff once you move in.
Push yourself to save. Just take the first step. Then all the remaining ones will just come easily. After all, you are purchasing for your own home. Just think that it will be worth it in the end.
We saved enough for a downpayment for a house a YEAR after graduating from college! How did we do it? Well, I was debt-free, and my husband's parents actually paid for all his (in-state, with discounts because his father was employed by the system) college, so he got to keep his internship money, so he was BETTER than debt-free. That helped a lot. We also owed nothing on our ancient used cars.
Then we just lived as if we were still desperately broke. Our apartment cost only $475 a month--this was only 11 years ago! We did eventually spring for master bedroom furniture, after the futon got old. And we lived in a relatively inexpensive area and looked for the best possible deal--we actually ended up paying about $60/sqft!
The whole living-like-broke thing wasn't really a part of a deliberate plan. We were just still in the clenched-up, can't-afford-anything mode from college. It took years to relax! When I realized I LITERALLY had no decent clothes left, having worn through them all, I decided that balance was definitely a better approach. :)
@Ronald_Mueller So true, just align your priorities and keep that as a motivation going forward.
@Jenny at FrugalGuruGuide There is something to that continuing to live as you are broke mentality. My wife and I did the same thing when we graduated as well. It is funny though how we have slowly moved away from a lot of that, mostly because we can easily afford to. But does bring back some good memories of going without so we can have money for the bigger picture.