How To Save To Buy Your First Home

As a child, I lived in apartments until I was 16 years old. I know firsthand what it is like to watch someone financially plan for their first home. My parents made the goal of becoming first-time home buyers a top priority, well before I became a teenager. It was a lengthy ordeal. They didn’t instantly know the best ways to make their home-buying goal a reality, but after some meticulous plotting, and intelligent financial choices, their dream was finally realized and we finally got to enjoy a real family home. Sure, we had rented houses in the past, but there was something momentous about knowing that this new house was truly ours. Being a renter is like being a minor league baseball player for years, and owning your own home is like finally getting called up to Major League Baseball.

If you’re part of a renting family, now is the time to start plotting and planning the move up to the big leagues. Following a few simple money tips can help guide you towards owning your dream home.

– Be realistic. Don’t have delusions of grandeur. Figure out what you can afford and don’t bend that number. A mortgage calculator is your friend. We all want to live in a mansion, but don’t confuse realistic goals with your wildest dreams.

– Since property markets are in constant flux, check on home prices religiously. Learn as much as you can by going to auctions, checking out online real estate sites, local newspapers, etc. No matter what you think you know about the real estate business, pretend that you are a newbie. Go in with an open mind and fresh set of eyes.

– Investigate state and local home-buying programs. There is a chance your state, county or local government operates programs for first-time homebuyers. Some of these programs offer housing discounts, or provide down payment loans or grants.

– If you are worried about current debts, you may want to look into refinancing. When people hear the term “refinancing”, they usually associate it with mortgage loans. You can also refinance debts like credit cards and car loans. The last thing you need is to be in serious debt, when it’s time to get serious about buying a home.

– We can’t discuss debts without bringing up the debt that never seems to disappear for some people: student loans! Like most college grads, student loans can drown your financial dreams for decades. Did you know that President Obama and his wife didn’t finish paying off their student loans until they were in their early 40s? So you are not alone in this. You might be able to cut down on your student loan payments by using some repayment options, such as income-based repayment plans. By adjusting your repayment plan, you can slice your monthly student loan payments, which can give you more to save for a down payment on your first home.

– Speaking of down payments… what is the magic number? A solid down payment should ideally be 20%, while anything under 10% might mean that this isn’t right time for you to buy a home. The more money you can save, the more manageable your mortgage payment will be. One way to start working on this is by saving 20% income from each paycheck. It might mean you will have to make some sacrifices, but if your ultimate goal is to be a home owner, it will be well worth it.

– During this planning process, it helps to have family and friends by your side. Buying your first home, or even your second or third home, can be a stressful experience. That’s why you will want some guidance from family and friends. It especially helps when a few them might be loan officers, or realtors, or someone who has just recently bought a home. They can offer you insight into the process like you never expected.