With an average price of $212,000 and a ‘typical’ down payment of 30%, you’re dream of owning a home requires you come up with just over $63,000 cash to put down on your home, and many Americans have no concept of how to save money for a house like that. That’s a lot of money and excessively out of reach for the average American. Even a small, simple and quaint $100,000 home requires a down payment of thirty grand. Of course, home buying in America is not always as expensive as that anymore. Today, it’s more than common for buyers to qualify for any number of different mortgage options that allow them to purchase a new home without the standard 30% as a down payment. In fact, USDA loans, VA loans and loans from Navy Federal Credit union do not require that any buyer puts any money down on a home when realizing the American Dream, and FHA loans and Mortgage Insurance loans require down payments between 3 and 3.5%.
What this means is that many buyers are financing their homes completely or putting down the very bare minimum. Considering that $212,000 home with a 3.5% down payment of only $7400 and change, it’s much more affordable for many homebuyers; even though many still have to learn how to save money for a house.
Even a few thousand dollars is a lot for many Americans who may or may not still be recovering from the economic downfall of 2008 find that this kind of money is often difficult to come by. According to a report issued by CNN Money in March, fewer than half of Americans save anything, and that means a down payment of any percentage is difficult to come by for many. The American dream is to own a home – a dog and a white picket fence and a strange number of children – and many Americans want to bring that dream to fruition, but have no idea how to save even the most minimal of down payments. Add in closing costs, moving expenses and potential upgrades and remodeling costs and many Americans give up before they’ve even given homeownership a chance. That’s where learning how to save money for a house becomes imperative.
Even those living on the tightest of budgets can still learn how to effectively save money for a house by adding these simple tweaks to your existing budget (if you don’t have an existing budget, get one).
Create a Separate Savings Account
Your regular savings account and your emergency fund are not to be touched – unless, of course, your regular savings account is already dedicated to homeownership. The best way to learn how to save money for a house is to actually set money aside that is specifically for your home. This helps tremendously by allowing you to see exactly how much you have saved for your home without seeing additional zeroes dedicated toward your emergency fund or college savings or retirement and allowing your mind to be tricked into thinking that you are closer than you really are.
Have Savings Automatically Transferred
If you want to know how to save money for a house, you need to talk to the HR department at work. They’re perfectly capable to taking a portion of your payroll and dedicating it to your down payment account so that when your paycheck hits your regular bank account, those funds are already gone and deposited into your “I’m buying a house,” account. You don’t miss what you never had, right? It’s the simplest concept, but it works the best. It’s almost a requirement for anyone attempting to learn how to save money for a house on a tight budget.
Cut your Expenses
We say it all the time; you always have wiggle room in your monthly budget if you are willing to get creative. If you want to learn how to save money for a house, this is it; cut the budget. Whatever you cut out of the monthly budget, stick that directly into your savings and watch your home fund grow. Cancel your $100+ per month cable bill by cancelling and subscribing instead to NetFlix and watching your favorite new shows online. That’s $7 a month, which means you now have $93 to put into your house account every month.
Change your cell phone plan and save $30 per month. Cancel your trash pick-up if you only have a minimal amount of trash each week to begin with (not recommended for those with lots of kids and lots of trash, though) and haul your own trash. That’s $20 per month. You’ve just saved a grand total of $150 per month that could go into savings to net you an additional $1800 per year to add to your down payment savings. That’s how you save money for a house when you’re already on a tight budget.
Windfalls are Savings Only
If you’re one of the many families who receives an income tax refund in the mail every year, put it away. If you want to know how many Americans save money for a house, it’s this way; putting income tax refunds, inheritances and other unexpected windfalls directly into their savings account so that they have a nice chunk of change already in place for their down payment. It’s not always easy to do this when you could come up with a half dozen other ways to spend that money, but your home is going to be one of the most important things in your life, and you should remember that when it’s time to save.
Find more Work
We’re not asking you to take on a second or third job and give up what little time you already have with your family, but have you considered a secondary job you can work from home? Are you crafty and have some ability to make something amazing and sell it online? Does your wife make all your baby girl’s headbands and shoes herself? If she does, why not open an Etsy store and sell them? It probably won’t make a killing, but when you’re learning how to save money for a house on a tight budget, this is a great method. This is money you don’t already have in the budget, so it’s free and clear for savings.
Just remember; when you are figuring out how to save money for a house whether you are on a tight budget or not, every little bit counts.
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