tips for saving...

Does anyone have any tips on how to save for a home? Prices are so expensive here and saving for down payments seems so far out of reach- how does everyone do it?

Re: tips for saving...

It's so hard. I think this is the biggest deterrent in being able to afford a home.

If you can, have an account set up where you have money directly deposited into it every week.

This is what I do for my emergency fund and it helps with not having to use the credit card all of the time.

Also maybe look into doing some kind of PT work and just put those checks into savings?

I've also known people who were able to bank all of one spouse's salary.

In retrospect, this is great because it would be great in theory to live on one salary, even if it wasn't the dream house or neighborhood, at least it helps to live within ones means.

Re: tips for saving...

Keep in mind that if you opt for an FHA loan, you can put as little as 3.5% down and roll your closing costs into your mortgage loan. So if you were to purchase a $350,000 home, you would need to save around $12,000. Of course, if you needed to roll in closing costs and were only preapproved for $350,000 (or that was all your budget would allow), you'd have to look more in the $330,000-$335,000 range to leave room to roll in the closing costs.

To be clear - I am not opining on whether this is a wise choice for everyone, but it is definitely an option that works for many. Some people have good income, low debt, and can afford the monthly outlay of owning a home, but for what ever reason, don't have a lot of cash on hand. Sometimes there are valid reasons, both financial (rising rates, tax benefits, etc.) and lifestyle related (having children, needing more space, etc.) that prompt people to buy a home sooner rather than later. And while it's ideal to have 20% down and get a conventional loan to avoid pmi, it's not always feasible for everyone to wait to save up that money. So many buyers take advantage of the FHA loan program, and only put the minimum down. And of course, there are other options in between the two extremes (you can do a conventional loan with as little as 5% down, for example).

As far as savings, I know that personally I worked at a higher paying job at the time I bought my house, and DH and I were fortunate to have gotten significant $$ as wedding gifts that we just left in an account as a house fund until we were ready to use it.

But I agree with things like looking into part-time work and putting the extra money in a house account. Also, any type of extra cash -- for example, a year-end bonus at work (if you get one), a tax refund (if you get one), gift money, etc. could be put into a house fund account. Also, cutting back on some lifestyle expenses -- vacations, dinners out, etc. and allocating that money into a fund.

Maybe figure out how much you can put aside per month for the house fund (after necessary expenses like rent and car payments are made), and then pay the house savings fund next, and then leave the leftover money for fun, discretionary expenses. That way you are treating the house savings fund like another fixed cost. Otherwise, maybe you will keep saying "when we have extra we will put it in the house fund," and the money will keep getting spent. It can be hard to make savings a priority.

But before you focus a lot of time and energy on savings, I would recommend meeting with a mortgage professional who can evaluate your current situation and advise you on what you need to do in order to become qualified to purchase a home. Maybe you have significant debt that will need to be reduced before you can buy. In that case, it would make more sense to allocate some of your savings to debt repayment first, and then focus on savings next. Or you may have credit issues that need to be cleaned up, and that's something you can work on while you save. A good loan officer can also explain the various loan programs available to you and the pros/cons. I think it helps to consult with a professional and have a game plan in mind when you plan to buy a house versus just making assumptions that may or may not be true and having unpleasant surprises when you are finally ready to buy.

tips for saving...

It's not easy...budget, budget, budget. That's my best advice. If you dont have any "guardian Angel" donors aka family who is going to give you a substantial gift and you aren't living rent free it's very tough. Even with a "great job." My DH managed to do it alone but it took us a while and we made saving a priority. I would figure out all your current expenses and try to eliminate anything that isn't essential. Figure out what you are comfortable living on each month. Make small sacrifices for example, I made coffee rather than going to Starbucks everyday. Sounds silly but it really adds up! Pay yourself first by putting a certain percentage of your salary away each month. Set savings goals for yourself. We put down 10% because we wanted to maintain savings in case of an emergency. I do not recommend d
going FHA, conventional is better in the long run if you can swing it. (FHA has fees attached to it for the life of the loan, whereas conventional does not). You'll want to talk to a loan adviser about that. Also, make sure your credit is in tip top shape so you qualify for the best rate. Get a copy of your credit report and begin the dispute process early (if applicable) because disputes can take weeks and it takes time for your credit score to be updated. Note, of yore buying with someone they take the lowest score, not average.

Good luck to you!

tips for saving...

we both have great credit...750+ no credit card debt...our killer is student loans. we pay $1500 a month just in student loans and have another 18 years to go on them!!!! I just don't know how we are ever going to save more money!!!!

Message edited 5/4/2014 8:17:09 PM.

tips for saving...

It's not easy. You have to make yourself a budget and stick to it. If you can't afford something in cash, you don't get it. Eating out, coffees, lunches out all add up. I started bringing lunch and breakfast to work every day and it saves me a lot. I used to spend at least $10-$15 a day on that.

tips for saving...

Yes! Agreed on little things. We both bring lunches pay cash etc. We only but coffee each day but we both do it. I know I know it's expensive and we do need to go look for a coffee pot. I'm just wondering about what we can do about student loans- those are what kills us. Does anyone have advice with them? We save everything else and pay our bills. We rarely go to dinner- maybe once a month. I just don't know what else we can cut besides coffee.

tips for saving...

Not knowing your financial position it's tough to say. One option is paying your loans off asap. I.e., Whatever you have budgeted for a home send to the loan until it's paid off. If monthly income isn't a factor, meaning you will comfortably be able to cover your loans, a mortgage and expenses but you just need a lump sum for a down payment you may want to call your loan company and see if you can defer the loan or decrease the payment although interest would still accrue.

Re: tips for saving...

I haven't looked into it myself, but I heard some people talking about signing up for loans where the payment is based on your joint income, and then the slate is wiped clean after 10 years regardless of how much you still owe---given your payments have been on time.

I'm afraid to open that can of worms personally because I feel like we are just getting by on our budget now (and we own our home) especially with utilities rising so much.....I'd probably have no $$$ to throw into savings which scares me more than having a student loan hanging around.

tips for saving...

Our main way of saving is direct deposit. We have a separate savings account where we both deposit money each paycheck and we never touch it. There's no debit card affiliated with it so we're never tempted to take money out of it.

Re: tips for saving...

When we were saving up for a house, we came up with the amount we could both reasonably save after all bills were paid for after each pay check. We then agreed to put in $X amount into our joint savings account on a monthly basis. We did this until we got to the amount we needed for a down payment + fees.

Re: tips for saving...