Three Tips for Saving for a Home Purchase

Buying your first home is a significant milestone and saving your money can be challenging as this purchase is typically one of the largest ones that you will make in your lifetime.

In a report by Harvard University, it was shared that more people want to purchase a home these days yet they are not financially able for various reasons. In addition, Millennials in particular are waiting until they get married and purchase their first home. With various types of challenges that you may be confronted with, here are a few tips for saving for your dream home.

Pay down your debt. The most important thing to do is to focus on getting your credit score as best as possible. Review your credit report to see if there are any disputes, incorrect information or inaccuracies so that you can remove the blemishes. You will also want to pay down your debt as much as you can so that you will have more available credit. This all will help you get approved for a mortgage at the best rate.

Increase your savings. Saving money can be tough with so many expenses these days. One of the best solutions for saving is to automate it. You can do this by setting up a direct deposit on your paycheck and then select a regular amount to be deposited into your separate savings account each pay period. This way you will not spend the extra money and it will be put aside for your house fund.

Downsize first, then upsize. Another helpful strategy is to scale back your lifestyle. This can be anything from selecting a cheaper car to trading in your cable subscription for more economical streaming options. This can only be effective if you follow through and put aside all of the savings into your house fund. Similarly to the general increase of savings, figure out how much you are saving from scaling back and then add this amount to your automated savings plan so it is more fail safe.

Starting on these tactics as soon as you can will help you save as much as possible. If you can achieve 20% for a down payment you will save even more money eventually as you can avoid paying PMI and potentially get a lower interest rate.