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4 Easy Steps to Save for a House

Right now, is a great time to buy a house. Interest rates are low, and inventory is high. You feel ready to make that move, but when you look at your bank account and you realize there isn’t enough in there for a down payment, you take a step back and decide that you might need to save up a little money first. Here are a few tips to help you save for a down payment for your house!

  1. Establish a target. Before you can save for your house, you need to know how much money you will need. How much you need is determined by how much you can pre-qualify for. So, give a lender (like me) a call he or she (or I) can help you figure that out and set you on the right path. A good rule of thumb is to not exceed 28% of your stable monthly income. So, keep that in mind during this process. The last thing you want after you buy a house is to owe money that you can’t pay back.
  2. Figure out your timeframe. This is the part that is going to be different for everybody. Everyone needs to save over a set period of time that will fit their needs. Some people will need to save more money over a long period of time, while others will need to save a smaller amount of money over a shorter period of time. It all depends on that individual’s or family’s circumstances.
  3. Invest wisely. There are many ways to grow your money and reap returns, but when you are saving for a house it is best to avoid any plans that involve risk. They might look appealing with their high rewards, but always remember that with high reward comes high risk. And the last thing your wife or husband wants to hear is that the money you accumulated over the last couple of years has disappeared because some company went under. The smart decision would be to invest that cash in a regular savings account and let it sit. Do some research before hand to find who is offering the higher interest rates first and then commit. 
  4. Budget. Once you have your savings account in place it’s time to budget how much you are going to shore up each month. Since you will be needing to save thousands of dollars each year, than you are going to need to budget appropriately. For some this could be a couple hundred dollars a month and for others maybe less. It all depends on your final amount and your timeframe. 

If you stay on target each month for the duration of your timeframe, you will get there and be happy you stayed disciplined. Owning a home is a real joy. There is a sense of pride, and obviously of ownership, when purchasing a home. This doesn’t mean it comes with its own stresses, but it is a great achievement and a great feeling. 

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