Hints to Help Save for Your First Home

People have many reasons for wanting to own a home but not many are willing to take the steps to achieve it. According to Harvard University’s “State of the Nation’s Housing” report, more people than ever want to be home owners but fewer feel that they are financially ready to do so. Especially when it comes to one of America’s largest generations ever, the millennials. They are waiting longer to get married, start families, and buy homes. Largely due to student loan debt and soaring rents. However, this generation can teach us about saving towards our big life goals because that’s exactly what they are doing!

Since around 2006 there has been the growing trend of living multi-generationally. I wrote a blog post about this awhile back. It comes into play as a tip for saving money because there is no better way to save money than to live rent free! In addition to moving back in with mom and dad after college, millennials are also saving money by downsizing to smaller apartments, cutting out extras such as cable and eating in versus ordering out, and being sure to actually save that money. I know when I try to cut out things in an effort to save money I just end up spending it somewhere else. An important key to downsizing is actually saving the money you’re not spending on those extras. You can also save money rather painlessly by automating it. If you have direct deposit you can easily set up regular auto-drafts into a savings account reserved just for buying a home. Even if you do not have direct deposit it is still very easy to transfer money to a savings account. However, if it is automatically auto-drafted it makes it much easier not to miss it and significantly less tempting to spend it!

In addition to saving money the best thing you can do in preparing to buy a first home is to pay down your debt and clean up your credit or establish credit in the first place. Making regular timely payments on loans, especially student or car loans, is a great way to show good credit. Making sure to pay-off credit cards but still keep them open is a great way to raise your score as well. Revolving credit, even if you do not use it is a good thing. Calling the credit card companies and making sure they take off anything negative after you have paid it is also very important to raising your score and cleaning up your credit. Do not assume they will do it automatically! I’ve seen people be shocked their score was lower than they thought because they had paid off some negative items but never followed up to make sure it was actually taken off their report. The credit card companies are not there to help you! You have to help yourself!

No loans or debt? Need to re-establish credit after running up credit cards or going through a major life event that brings large bills such as surgeries or divorce? It can be tough to establish credit in the beginning, secured credit cards and small loans from credit unions can be your best bets to achieving a credit history. Go to a local credit union and take out a $500 loan and pay it back quickly and wham-o you just established yourself some quality credit. Secured credit cards are good for establishing or re-establishing credit because they are basically a debit card in that you can’t spend more than the amount on the card. You pay a certain amount into it, say $300, and you are allowed to charge only up to that $300 so you can never go over and get yourself in trouble. Eventually you will build enough credit to get a major credit card. Store cards can also help you build or re-establish credit. I had a friend go through a messy divorce and no one would give her a credit card but JC Penney. She bought a few things and paid it off quickly and re-established herself some credit. Even JC Penney won’t give you a card and you have a family member or another qualified person willing to help? Sometimes you have to get a little creative in order to build credit. My friend’s daughter had a heck of a time getting a car loan with any kind of decent interest rate due to no credit history. Just having a co-signer may not be enough to get a decent interest rate when you have no credit history. If you have a very high payment it may not be manageable and then you are in a worse position than you were before. My friend ended up putting the loan in her name and made her daughter the co-signer. They had the car payments sent straight to her daughter and her daughter paid them all on time and built herself some excellent credit.

Now that you’re armed with money saving tips go forth and be diligent savers! And be sure to call me when you’re ready to buy that first home. First time home buyers are truly my favorite to work with. I love the looks on their faces when they sign the papers and make their dreams come true!

#bbsellskc #bryanbechler

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