- Jan 19, 2018
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Home ownership is an accomplishment to be proud of, but it takes hard work to achieve. Saving for a new home is all about priorities. There are many great ways to save money for a downpayment and make your dream of homeownership come true. Mosaik Homes offers you these tips to save for a new home.
A Tax Free Savings Account can be a great place to save your down payment money. Your money can grow tax free in this account, which means you won’t have to pay income tax on the interest grown in this account.Often it makes sense to open a savings account online or at the same bank or credit union where you now do your checking, as they tend to let you transfer funds back and forth for free, and instantaneously. This makes socking away savings as easy as possible.
Start a Budget
The key to saving more money is identifying areas where you can cut back, and put more money into your savings. Start by making a spreadsheet that shows your monthly gross income and subtracted taxes and other costs. This will give you your net income after taxes. Show what you pay for other monthly costs such as rent, student loans, car payments, and credit card bills. Subtract these costs from your net income and see how much money is left each month. This way you can see how much you take in, and how much goes out. Determine where costs can be cut. Given that income and expenses are closely matched in many households, the only way to get ahead is to bring in more money or change your spending habits.
Pay Off Credit Cards
It’s tough to save money if you are paying a lot of interest to someone else. One of the first things you should do to save for a new home is pay off all of your debts. Start with your smallest high interest debt, and pay it off immediately. Then take the minimum payment from that debt and use it to help you pay off the next small debt that has the highest interest rate. This way you won’t have those pesky high-interest payments going out of your account each month.
Negotiate Interest Rates
Interest rates for such things as credit cards, savings accounts, car loans, and other accounts differ greatly. Go through every account and check what interest rate you’re paying. Can you do better? If you’ve been making full and prompt credit card payments, call up the credit card company and tell them you want a lower rate. You might get a lower rate simply by asking! This will save you some money while you work on paying off these debts.
Get Rid of One Vehicle
If you have a partner and you own two vehicles, consider getting rid of one. This can save you thousands of dollars per year. You or your partner can look at walking, carpooling, be cycling to work (weather permitting) or be taking transit which is 80% cheaper than owning a car. If you can make this work, you can potentially save one car payment every month, plus gas, costly maintenance, and insurance payments.
Check Your Credit
Your ability to borrow and the rate you pay are dependent on your credit score. Lenders might be very willing to offer you a mortgage with less down if you have strong credit.Your credit score is based on the credit reports, electronic files which show such things as where you have credit accounts, how much you have borrowed, your total debt, any missed payments, and how much more you can borrow with existing accounts. Ensure that you check your report for factual errors and out-of-date items a few months before you apply for a mortgage. This lets you know where you stand and gives you enough time to clean up errors and disputes.
Saving for your first home can seem like an enormous task. However, these tips will make sure your finances are in order and get you started on a savings plan to make your home ownership dream come true.