4 Steps to Save Money to Buy a House

May 31, 2022•4 min read

The smartest way to go about buying a house is to make sure you save plenty of money to ensure a smooth transaction. Buying a home isn't only about saving for a down payment, you have to consider closing costs, down payment, and moving expenses as well. Where do you begin? 4 Steps to Save Money to Buy a House

Estimate How Much You Should Save

A good general rule to how much you should save for a house is 25% of a home's purchase price to cover the upfront costs. What does that entail? The down payment can be anywhere from 3 - 20% of the purchase price of the home, the closing costs range anywhere from 2 - 5% of the purchase price and moving expenses which can vary depending on distance and what help you receive but usually average $1,250 up to $5,000.

To properly estimate the amount you'll need to save, a local or national lender can help you determine the amount and how to save the amount within a timeframe that works for you. Upfront costs will vary for each person as it is based on the type of loan, your down payment amount, location, purchase price, and other factors.

Open a High-Interest Savings Account

Opening a high-interest savings account will make your money work for you, it won't be a quick influx of money but, it will help your savings grow in the safety of your bank account.

Some people choose to put their money in the stock market, while this can be a quicker way to get your money to grow, it is riskier as it is dependent on the market's volatility.

Automate Your Savings

Automating a payment to your savings vs. putting money aside and adding it to your savings later is the safest way to save money and continuously make your money grow. When you don't automate your pay to your savings account, you put your money at the risk of spending it before you can ever make a deposit. You are less likely to "borrow" money from your savings.

Find Ways to Save

Cutting costs and saving a little more each month can add up quickly. Here are some tips on how to save money quicker while cutting costs in your everyday living expenses.

Reduce Monthly Expenses - Cutback on subscription services. For example, get rid of cable TV, and limit your streaming services down to one or even none. Consider buying generic vs. name brand items, this may not seem like much but, it really can add up. Negotiate a better rate with your internet provider or switch to a less expensive provider. How about bundling your services? Check with your insurance provider about additional discounts you can receive for bundling your home and car insurance or multi-car discounts. Refinance your loans.
Pay Down Your Debt - Debt will not only affect the amount of money you can save but, it can affect qualifying for a mortgage. Pay down your credit cards with the highest interest first and once you pay off a debt, use the snowball method to continue to reduce your debt quickly. In the snowball method, once you pay off a debt, you move on to the next one not only applying for the minimum payment but, also including the amount you were paying on the debt you just paid off. Paying down your debts should also improve your overall credit score.
Earn Extra Money - Find ways to earn extra money. Aside from a tax refund, birthday money, or bonus from work, there are other ways to make extra money. Consider a part-time job in the evenings or over the weekend or sell items that you no longer want or need any longer.

Conclusion

There are plenty of ways to save money and reduce spending, you may need to get creative but, it can be done, it just depends on how much you want it. Make sure that you keep track of your savings, seeing how your savings grow will either make you push harder or will keep you on track to meeting your savings goal.

Additional Advice for Buyers

For more information on Nebraska real estate purchases, Omaha properties or any real estate around Papillion and Omaha, please contact Flatwater Realty anytime.

Alex Heyen

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