Buying a home is a huge milestone in life! It is the first time you are out on your own and can make changes to your living space. You can forget worrying about renting policies that control whether you can have a pet, whether you can hang up decor, or repaint the interior. Anything you want can become a reality when you own a home. While homeownership is often cheaper than renting and provides you with more control, it does come at an upfront cost. Your down payment, closing costs, taxes, and attorney fees are all factors that go into purchasing a home. If you want to buy a home but don’t have the money to do so, you may need to adjust your spending habits to save. But have no fear! Here are a few tips to help you on your journey toward saving for a home!
Before you begin budgeting for your first home, you need to know how much home you can afford. The general rule of thumb is your debt-to-income ratio (DTI) should not exceed more than 28% of your gross monthly income. Your debt-to-income ratio is a measure of your recurring expenses compared to your monthly gross income. Your recurring debts may include your mortgage, student loans, credit cards, and more. You should keep this in mind when saving for a home because it determines how expensive of a home you can qualify for and afford. Another easy way to determine what you can afford is through our Monthly Payment Calculator. It allows you to see just how much money you’ll need at closing, your estimated monthly payment, and more!
Once you’ve determined how much you can afford, it’s time to start saving! An easy way to put money aside for your first home is with the help of budgeting apps. My favorite app to track my monthly expenses is Mint. I can create monthly budgets with Mint to delegate how much money I’ll spend on necessities such as gas, groceries, and rent. Using the budgeting tool, I recommend creating a category specifically for your future home. Any extra savings throughout the month should go towards your future home budget! This method gives you the flexibility to start saving for your home while also tracking how much money you spend on average per month.
Once you learn about how much money you can set aside per month to allocate towards your future home, set up an appointment with your bank or check your banking app to set up automatic withdrawals. On a specific day each month, the bank can take a certain amount of money from your checking and automatically transfer it into your savings account. Automatic withdrawals are perfect for people who find themselves tempted to spend that extra money that they earn. If you’re someone who doesn’t touch their savings, this is a perfect way to help you save money for your future home!
So why wait? Make your dream to own a home a reality and start saving! It’s as simple as calculating your debt-to-income ratio, budgeting your monthly income, and automatically withdrawing money towards your savings account.
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