The First-Time Home Buyer’s Guide To Saving
Buying your first home is the ultimate form of adulting. Negotiating a bank loan, calling inspectors, learning about mortgage rates and offerings—it’s definitely grown-up stuff.
Why Saving for Your First Home is Important
As a first-time home buyer, why is it important to save up for the big purchase? The more money you can contribute to your home’s down payment, the better your home loan rates could be. Conventional home loans typically require you to put down at least 3% of your home’s final cost. But, if you can manage to scrape together 20% or more, you may see lower up-front fees, ongoing fees, and a reduced monthly payment — all well worth it in the long run.
If your home ranges between $200,000 and $300,000, most people save between $50,000 and $70,000 before you can even start looking – and that kind of down payment could require a slightly unconventional approach to savings.
Follow these tips for saving for your first home and accrue money faster than you thought possible:
1 – Practice The Power of Persuasion
Did you know that credit card interest rates, your cable bill, and even your car insurance premiums aren’t set in stone? If you feel like honing your negotiating skills, consider calling up your providers and asking them for better rates.
Argue that your history of making timely payments deserves to be rewarded with better APR or monthly rates. Tell them you’ve received a better offer from a competing provider, and see what they say. It just may work!
2 – Review and Optimize Your Credit
If negotiating doesn’t sound like your cup of tea, you can still improve your credit without talking to anyone on the phone. First, make sure your payments are on time, and that you don’t have any outstanding debts. You can use a credit check website to review your credit history, as well.
Of course, paying your debts off is the best way to improve your score, and that will obviously come in handy when you’re applying your housing loan, too. So combine your savings plan with a debt reduction effort to make sure you won’t be sacked with loans after you close on a house. Not sure where to start? Try a free debt reduction mobile app, like Debt Tracker or Mint.
3 – Get a Side Hustle
Thanks to the rise of the sharing economy, it has never been easier to make a little cash on the side. In fact, you can use apps like Lyft and Uber, to turn your car into a cash cow at the click of a button. An additional income source never hurts, and you’ll probably come away with plenty of repeat-worthy stories about the people who use your services. Plus, you can write off your mileage, gas, and car maintenance come tax season.
4 – Become a Couponer
More than 55.7 million Americans use online coupons, or around 25 percent of the U.S. population. Couponing websites like Coupons.com and RetailMeNot offer great discounts on products, and even have a list of retailers that offer free shipping. Prefer shopping via a mobile device? Apps like Ibotta or Honey can save you loads of money on items you already buy—as long as you can avoid those impulse purchases. So, while holiday shopping this year, use these websites and apps prior to making any purchase.
Armed with a full force of smart tactics, you’ll be a savings savant in no time. Take that, bank account!
[Editor’s Note: This post is a guest submission from Erin Vaughan of Modernize.]
Learn more about the tax benefits of college savings accounts like 529 plans and Coverdell ESAs with the experts at H&R Block.