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You’ve had an image of your dream home in your head for months, maybe even years. You know exactly what it’ll look like, how big it will be, and the way you’ll decorate it. Now, you’ve decided it’s time to really start saving for it!
Even if you’re not 100% certain of the details of your future dream home, odds are, you’ve thought about an ideal house you’d like to live in. If you’d like to start putting more focus and money towards that goal, here are some tips you might want to follow.
Clarify your financial situation
It’s best to get this one out of the way first. Taking the time to clarify your finances can be time-consuming, and you might even be disappointed with the numbers. On the other hand, it’s really important to know where you stand before you start saving. Otherwise, how will you know how far you are from your goal?
Start by looking at your income and see how much you’re bringing in every month. Then, compare it to your average monthly expenses. Pay extra attention to costs like utilities, internet, and other stable expenses you know will appear every month. This will give you a good idea how much money you will have left over when everything is paid.
You should also take a look at your credit score. The better shape it’s in, the lower the mortgage rates will be once you reach that stage. This will help you save for your dream home down the line!
Prioritize your purchases
Before you started saving for your dream home, you may have been spending a lot of your extra money on non-essentials. That’s not a big deal when you have no particular plans to make a big purchase and have the freedom to treat yourself. Now you’re looking at a huge expense, though. It’s probably time to take a hard look at what you really need to be spending on.
If you’ve been making – or planning to make – any big purchases, stop and reconsider. This doesn’t mean cutting out your coffee runs. Obviously, you won’t be able to afford a house just from eliminating $5 drinks. But if you tend to spend hundreds of dollars shopping online, just because you can, it’s time to take a step back. Don’t take on any additional expenses right now, either. This probably isn’t the best time to buy a new television or the latest iPhone.
From now on, paying for a home is your number one priority.
Focus on a down payment
The down payment for your dream home will be one of the biggest expenses you’ll encounter, and it’ll come up fast. Down payments are between 5 and 20 per cent of a home’s purchase price. No matter what percentage your down payment is, it’ll be a considerable amount. That’s why it’s one of the top things you should be focusing on when you’re saving for your home.
The larger your down payment is, the lower your monthly mortgage payments will be. You’ll probably also enjoy lower interest rates. Paying attention to your down payment is not only a big part of saving now, but it will also save you money in the future. Do your best to have a decent-sized down payment saved up!
Remember closing costs
When you’re saving for a home, naturally, you’ll be the most concerned about your down payment and monthly mortgage payments. However, you also want to make sure you’re saving for those pesky closing costs. Things like a home inspection, title insurance, land transfer tax, and legal fees all add up. You don’t want to realize you’ve been saving all this time, and forgot to account for these extra items.
While you’re saving, add some extra money dedicated to closing costs. Odds are decent they’ll cost you thousands of dollars in the end. Think about how long you’ll need to save before you can buy a home. From there, you can work out how much you should contribute to closing costs each month. You can read more about typical closing costs and how much they are here.
It’s no secret that saving up to buy a home takes time. If you decide you want to purchase your dream home, but you haven’t started saving, you’ll have to wait a while to own that house. You want to start as soon as you can! Even if you don’t know where exactly you want to live or what kind of home you’re looking for, that’s okay. It’s never too early to start saving if you know for sure that you want to be a homeowner. The market here in Halifax is intense, so the sooner you can enter it, the better.
Buying a home can be stressful, and you might need some help with the process. If you’re looking to become a homeowner and have questions about your mortgage options, get in touch with us at Clinton Wilkins Mortgage Team! You can reach us at (902) 482-2770 or contact us here.