Your dream home is something you can call your own whether it might’ve taken you years to get at this point in your life or you’re still on your way to getting there. You often ask yourself the question, will you ever be ready?
No matter what the case is, you’ve made conscious efforts to prepare yourself for that down payment, which requires you to pay 20% of your dream home’s price. However, it’s the normal process to give a down payment and balance the rest of the price through loans.
Below are some of the different tips and tricks to be ready for this important moment in your life:
1. Consider the price and budget
While it’s understandable to go for the big fish in the sea, you have to consider the home’s price and the budget you have.
Establish your budget from the very start and be firm with it. In detail, open a spreadsheet and list down your income, as well as your monthly expenses like bills, taxes, etc.
Make sure you’re ready for this kind of commitment with the right preparation. Set a timeframe for yourself and consider factors such as your savings goal and the specific time you want to get the house.
2. Look at your payment options
When paying for the down payment, keep in mind that you always have options and that it’s recommended to have a bigger down payment to avoid having problems with the mortgage.
You can also try getting a loan since loan providers will most likely consider applications that have lower mortgages. Further, you can look around your area for government programs that would assist you in paying the down payment. If there’s none, there are private agencies that have reasonable loan programs. At the end of the day, you just must do your research.
Lastly, keep your documents in check. You’ll be needing it in every step of the down payment process. You’ll thank yourself after for not getting a headache from all the documentation required.
3. Save and cut your finances
You might need to adjust your lifestyle one way or another. From knowing where your money goes monthly, sitting down and budgeting your finances such as bills, rents, daily expenses, and some emergency needs, to monitoring your spending habit.
Aside from that, you can set up a payroll deposit that automatically cuts a portion of your salary for down payments savings. In this manner, you won’t forget to save and won’t have the temptation to touch it unless you’re ready for the down payment.
In line with this, don’t just save right on the dotted line. You should provide allowance when saving because of some extra payments along the way.
4. Improve your credit
Your credit will serve as your proof of ability to pay to the lenders, so you have to build a good credit score, which will be based on your credit records such as reports and electronic files.
This will also show your credit payment history. If you’re always on time, then you’ve nothing to worry about. Your credit history is solid enough for your loan to be granted. On the other hand, a bad credit payment history may put you in idle.
You can adjust by using the credit card for emergency purposes only. If what you’re purchasing is out of your budget, then reconsider buying it.
For now, your focus should be on getting enough down payment budget to get your dream home.
5. Use your expendable assets
If you think that your mind, body, and time cannot handle a second job, then you can just make do with what you have.
Do you have valuable collections at home such as memorabilia coins or baseball cards? Look it up if you can sell it at an ideal price online. Not only do you have an extra source of income, but you’re also not spending time and energy.
Organize your current place. See which ones are not going to make it in your new home for many reasons (e.g., space, moving problems). One way to prepare for your dream home is leaving the clutter out and starting fresh in the new space.
Living in your dream home is a process. Save and invest your money in advance because you wouldn’t want to be in a situation where your dream home is also on the brink of vanishing in a snap.