Become A Homeowner With These Saving Habits

Changes you make now can help pave the way for becoming a homeowner…

You’re at that stage, thinking about your future and buying a home.  You might be paying off school loans, establishing your career path, or starting a family, and now you’re ready to take on the responsibilities of a home.  Buying a home is one of the largest purchases you’re ever going to make, so you need to make sure you’re prepared.  Doing the work now and over the next six months can put you in a better position and help you to save in the future.  Here are some helpful habits to put you in the right direction: becoming a homeowner.

Start Saving … Now
Most of us know that one of the first things you can start doing now to help make your path to homeownership smooth, is to build up your savings account.  While the task may sound daunting — especially when funds are tight — it doesn’t have to be.  It’s important to remember that a stockpile of saved money doesn’t happen overnight.

Save For The Unexpected
When it comes to saving for a future home, most people only consider their looming down payment. This is a mistake you don’t want to make.  Experts suggest saving an additional three to six months’ worth of expenses as an emergency fund.  In doing this, you’re building a solid foundation for your finances, but remember, this is in addition to saving for your home.  If that sounds daunting, start with the level of expense that would cause you to rush to a credit card.  Have at least that amount available and build toward six or more months’ of living expenses.

How to Save: Cut Costs Where You Can and Create a Budget
The biggest obstacle to saving money is changing your habits.  It can be easier sticking to a major goal when you include family, friends and workmates in the challenge, because they can help hold you accountable.  Another tool is to keep pictures of your dream home in your wallet, on the fridge and next to your computer, so that you are reminded of your goal any time you’re about to spend money elsewhere.  It’ll help keep you motivated.  Create a timeline for your ideal time to buy.  One way to do this is to take money saved specifically for a home and subtract it from the 20 percent you’ll need for a down payment.  Divide the remaining amount among the number of months you have until you want to buy and hit that goal each month.

Know the Importance of Your Credit Score
It’s often that you even think of your score, much less know what it is, until you hear that you have bad credit as you try to apply for a loan.  While perplexing, your credit score is a number that has great impact on your future purchasing power.  Be smart and start paying attention to this number now.  If your credit card or bills offers the option of having that score printed on your monthly invoice, take advantage of that benefit, so you can better keep track of where you need to be.  Remember, mortgage lenders, credit card companies and even employers are looking at your credit profile; you should be too. One recent statistic from the credit industry is that one in five Americans has errors on their credit report — errors that could cost you a higher interest rate on your credit cards, a home mortgage or even your car insurance.  Take control of your credit by actually using your credit, keeping usage around 35 percent of available credit and always paying your bills on time.  If you want to buy a home, get fiscally fit.  Time will be your friend if you start early.

Down Payments
Over the years you may have heard of people buying a home with as little as a 3.5 percent down payment. Maybe this caused you to sigh a breath of relief.  A down payment that size may sound quite doable to you, but most loan officers and real estate professionals advise more than that, to keep your overall costs lower, and if you can,  20 percent down.  This will help you to avoid the obstacles of: 1. being “house-poor”, when you’ve over-extended yourself to spend more on a home than you can comfortably afford and 2. paying PMI (private mortgage insurance).


Take advantage of these ideas to help you get prepared to buy your home.  While you might think some of these may not apply your lifestyle, or that they are oversimplified, some could spur additional thoughts on how to save even more.  Saving is the most important element of the buying process, the old addage, “every penny counts” holds true.  Your ability to save as much as you can where you can, will determine how much house you can buy and if you will have to pay added loan costs or PMI.

1. Set a grocery budget. You can use grocery list apps to help you maintain your weekly lists and costs.

2. Make breakfast for dinner.

3. Freeze leftovers. If you make more than you expected, or double the recipe, you can freeze the meal for a later date, when you don’t have time to cook.

4. Stock up when you find a deal. Be reasonable about this, don’t overstock on items each week, continuing the spending cycle, plan accordingly, so you don’t have to make multiple purchases of specific items on a monthly basis.

6. Grow a garden, $10 – $20/month.

7. Cook vegetarian once a week, save $20/month.

8. Get Your Over-the-Counter Meds From Amazon.

9. Check Your Bills. Companies make mistakes all the time and it can cost you hundreds of dollars. Always check your statements to ensure they are correct.

10. Call for special discounts of the month. Contacting your internet provider or other bill companies and asking for their deals that month may save you money. For ex. your cable company may have a 6 month special, that would save you over $300. You never know until you call! 11.Cut dryer sheets in ½.

12. Keep the shades down. Draw the curtains, pull the shades- it keeps that house cooler and in turn reduces your energy bill.

13. Automate it. Reddit user professional_slackersays: “Ever since I bought my house and took on a mortgage payment of $800 a month, I have had my bank take $400 out of my paycheck every other week and put it into a separate savings account. Then at the end of the month, I make my mortgage payment directly from that account. I never see the money, so I don’t miss it, and there’s no way for me to run out of money for my house payment. It makes things so much easier, especially for a habitual over-spender like me.”

14. Maintain a budget. When you develop the habit of making a plan for each paycheck, you take control of your money instead of letting it control you.

From: Greg Mull Senior Loan Officer, Summit Funding, Inc. LinkedIn page