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Personal Finance Hacks for Homebuyers: How to Save Money
Buying a new home is an amazing experience, but it can also come with a lot of stressors. Finding funding, saving money for a down payment and the moving costs, and making sure you don’t run through your savings in the first year of home ownership are all important factors, which means you’ll need to have a very good plan in place before you take the leap. Careful preparation will allow you to make good decisions when the time comes and help prevent any nasty surprises down the road.
Fortunately, there are many ways you can save money and keep your finances in order, even when making a purchase as large and important as a house. From knowing how much to put down to having money set aside for closing costs and annual needs, such as insurance and HOA fees, doing research ahead of time will help you stay on top of your money when it matters most.
Keep reading for some great tips on how to get started.
Save Beyond the Down Payment
Having a good amount of money saved back is, of course, essential when it comes to buying a new home, but you’ll also want to be prepared for other expenses, such as utilities, maintenance, repairs, and HOA fees. These costs can add up over the course of the first year, but being prepared will help prevent any shocks to your bank account. Use a home cost calculator to figure out how much you’ll need to save.
Pay Off Your Debt
Having a mortgage will be one of the biggest debts you’ll ever incur, so it’s a good idea to pay off as much as you can before you even start looking for a new house. Not only will this help you save money for a down payment, it will allow you to clean up your credit score, which might help you get a better interest rate with the mortgage company. It will also help to get pre-approved so you’ll know how much to budget for.
Start Thinking About the Future
If you have kids -- or are planning to -- it’s a good idea to start thinking about the future. College can be a huge cost, especially if you’ve already put a lot of your savings into your home. Think about securing a savings plan for your kids’ education, such as a 529 account. This type of savings account comes with some limitations -- for instance, it can affect the amount of financial aid your child qualifies for -- but it can be very helpful for young families.
Know Your Options
Many homeowners are faced at some point with a tough decision, whether it’s regarding spending the money to make big home repairs or paying off large medical bills. When it comes to needing money, it can be difficult to know where to turn, so it’s important to know what your options are. If applying for a personal loan doesn’t sound appealing, consider borrowing against your home’s equity. You may not get the full amount of what your home is worth, but the interest is tax deductible, unlike a personal loan.
Knowing some tips and tricks of the trade will help you plan better for your family’s future, and it will relieve a bit of stress to know what your options are down the road. Get knowledgeable about your finances and rights as a homeowner, as well as the best ways to start saving for the things you’ll need. With a good plan, you can ensure that your loved ones will be well taken care of well into the future.
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A shout out to Brittany Fisher of FinanciallyWell for lending her insights!