Buying First Home--The Down Payment Difficulty and Simple Ways to Save for it
Saving for a down payment and closing costs is probably the number one reason first time home buyers for Tampa Bay Area Homes for Sale remain renters instead.
Of course you also need to have the necessary income, debt to income ratios and credit worthiness. You will also need some cash reserves. However owning your own home at some point in your life is good for you and your family. It is good for communities too. It is worth the temporary sacrifices you will be making.
Here are some ways to get you on the road to home ownership:
First, before you do anything you should contact a lender to find out how much money you will need based on your housing needs and budget. We have a great preferred lender so contact us. You will want a lender who will assist you in getting your credit in order so you get the best interest rate and terms. It could take as much as a year to get ready to buy so it is best to begin early in the process.
In order to save money, you need to keep your expenses to a minimum of needs, not wants. There are plenty of ways to cut expenses and none of the suggestions below should negatively impact your health or social life.
Begin with a simple budget. Plan for your annual, quarterly, monthly, weekly and daily expenses. You can google "budget" or look on Pinterest for free forms you can use. You could also just write things down or use a spread sheet.
Eat at home. Books have been written on this subject but here are a few tips: Clip some coupons and use store brands. Some are pretty good. Look on Pinterest or Google for meal plans, shopping lists, frugal meals, freezer meals and quick to fix meals. Do meal prep on Sunday so you are ready for a busy week. Watch your produce purchases. Buy in amounts you need or will use. Lots of money is wasted on produce. Cooking together is really fun and eating at home is usually healthier too. You can also take leftovers to work for lunch the next day
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Buy used whenever you can to depreciate your costs and save your budget. Vehicles are a prime example of the benefit of depreciation. A pre-owned automobile just a couple of years old offers a substantial reduction in cost, but you can save even more if you buy 10 year old vehicles or older. Buy from a reputable dealer and avoid "buy here pay here" if you can. There will be repairs so save for them; but usually repair costs are way less than the annual cost of a new car. Some folks are able to DIY some repairs , especially oil changes, new wiper blades, etc. If you must hire a mechanic, shop around or seek a reference to a reputable mechanic. We have owned used cars for many years and when repair costs exceed their value we usually trade them in. For our vehicles we pay cash or get a credit union loan or even use a credit card (not the best choice) Owning a used car may leave more room in your debt to income ratio offering you the advantage of buying more house when the time comes.
Do not buy anything on impulse. Always, always plan, shop and preferably sleep on it for large expenditures.
Maintain a simple wardrobe that stands the test of time to save money on clothing. Ladies can search Pinterest for Capsule Wardrobes. Buy only what you need to mix and match with other items you already own and shop thrift stores (Salvation Army and Goodwill have new clothing apparently donated by department stores) and sales first for the best your budget allows. You can also trade or borrow from others if you need something for a special occasion. Kids love hand-me-downs too. Sewing simple items like skirts, yoga pants and tops is EASY and easy on your budget. Check out Pinterest for easy sewing methods and patterns. I bought a vintage sewing machine in a cabinet at a community yard sale for $40 and it sews like a new one. I love it. I found another one on the curb for FREE!
Review and research items like insurance and credit card interest for additional ways you might be able to save.
Move to a smaller house, apartment, less affluent neighborhood or rent a room if you can. Some move back home with family in order to save money for their first home. Rental housing is a large budget expense that is getting ever larger. Rent is money that is gone and you have nothing to show for it. You just made your landlord money.
Find money for a down payment. You can receive a gift from a relative but there are other ways to find money for a down payment.
Pay down credit card and revolving credit accounts. They eat up your housing budget. Use Dave Ramsey's Debt Snowball Method: I think I would start with your smallest balance first. Attack the first balance on your list by paying as much as you can each month while making minimum payments on your other accounts. When you’ve paid off the first account, add what you were paying on it to the payment on your next debt and pay that one off. Your results will keep you motivated to pay off all your debt and keep it paid off. BE AWARE that credit scoring requires you to have open credit accounts so don't close out your accounts especially the old ones, just keep them paid down. Check with your loan officer about this. Having no credit at all is somehow worse than having too much credit. Go figure.
Cut the cord to the extent you can.
Opt for FREE and low cost entertainment and staycations. Skip budget busting movies and other entertainments. Florida has wonderful beaches, trails and state parks that are low cost. Camping is fun too. This is temporary remember and sometimes a picnic in the local park or or watching the sun set over the Bay is really fun. You and your relationships can't help but benefit from some exercise, relaxation and one on one socialization.
More possible ways to save: a)Give up your Vehicle? We are really dependent on our family vehicles in most of the Tampa Bay Area but you might sell one of your cars if you have more than one and car pool or ride the bus until after your own your home. b)Sell some of your stuff. We all have too much and you'll benefit from a decluttered living space. c)DIY when you can. Household cleaning products contain mostly water. You can make your own for pennies using Borax, Washing Soda, Ammonia, Alcohol, etc. (don't mix all of these together though.) Use formulas or recipes on line. d)Make simple gifts for holidays and birthdays or give the gift of time like babysitting or chore certificates. e)Work a second job for awhile. Like maybe helping someone move, pet sitting or sitting with an elderly person overnight--assuming you just need to be there in case they need something. I never was able to work a second job but many people do. f)Research to see if a different phone plan costs less.
Maybe you can't do everything here or can't do it all at once or all the time. Need to eat out occasionally? It's okay. Need to go off your plan once in awhile? That's okay too. Just do what you can and see how fast your savings add up.
Do you have a way to save for a down payment you could share with us? Please comment. We would love to hear how you save money or find money for a down payment.,
When you are ready to find that perfect home, we are ready to help you. We can help you set up a search, compare and contrast neighborhoods, evaluate schools, evaluate your needs and wants. estimate drive times from different locations, explain how things go and what to expect in a real estate transaction, answer all your questions even help you find a home that has not come on the market yet. Oh and by the way, our fees are paid by sellers or builders if you are in the market for a newly constructed home. Our services are FREE to buyers.
We'll be with you every step of the way!
