Saving money for your own house seems like a far-fetched idea if you are renting your current home. However, the dream of homeownership might not be as impossible as you think.
According to the government, the standard for housing affordability is thirty percent of an individual’s income. Unfortunately, the current housing market has renters paying a third or half of their income toward rent. As a result, homeownership becomes something more of a dream rather than an attainable goal.
However, it is not impossible to save money for a new house while you’re paying rent for your current housing. With these pointers, you can get started on your new house fund as soon as possible:
1. Downsize your debt
When looking for home loans in McCallen, for example, one of the first things that mortgage companies will look at is your credit score. If you have a good credit score, the chances of qualifying for a bigger loan is increased and you have a higher chance of getting low-interest rates. This makes buying a home much easier for you, and it can give you more freedom when choosing a house.
The best way to increase your credit score is to downsize your debt. Avoid incurring new obligations, work harder to pay your current ones, and stay on top of your payments to avoid collecting additional fees. In this way, you can increase your credit score and have more money saved for your future house.
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2. Save bonuses, tax refunds, and pay raises
Whenever you come across additional income, deposit a big chunk or all of it into your savings account. Resisting the urge to spend it can be tough, but it will all be worth it when you get the keys to your new house.
3. Get a roommate
If you currently live alone, getting a roommate can slash your current expenses significantly. It might be inconvenient for you to share your space, but it’s a great way to save thousands of dollars every year on rent.
4. Reduce expenses
Take a look at your current expenses and see where you can make adjustments. Here are some examples:
- Save electricity and water. Cut back on your water and energy use by making small adjustments like turning off the lights when not in use, unplugging electronics, taking shorter showers, washing dishes by hand, etc.
- Stop vices. Reduce or stop drinking and smoking. Not only are these habits expensive; they are also bad for your health.
- Get rid of unnecessary bills. Do you pay for cable but watch Netflix most of the time? It’s time to unsubscribe and do the same for other unnecessary subscriptions.
- Cook at home. Brunches, take-out, and coffee can put a dent in your wallet, which means less money for your savings. Instead of eating out, buy groceries, and learn how to cook at home.
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5. Find other sources of income
Get a side job. Sell your art. Drive for a carpool app. Whatever side hustle you do, the proceeds should go to your downpayment fund.
Open an account for your mortgage downpayment fund and start saving money for your dream home. As a money-wise renter today, you can rest assured that you will be a homeowner soon.