Here’s How You Can Save Up For Your Dream Home
Everyone dreams of obtaining a home that’s fit for their aesthetic and lifestyle. For most people in the US, homeownership is still very much part of the American dream. Many still aspire to achieve it, despite how buying your own home is much more expensive in recent times. Even Millennials aren’t too discouraged as they make up the largest share of homebuyers in 2019 at 37 percent, and are expected to form 20 million new households by the year 2025.
Getting a new home involves several factors such as checking out the location, the community, and the space you need. More importantly, it means checking if you are financially capable of being able to afford the house you want. The National Association of Realtors records that as of March 2021, the national median price of a single-family home is $334,500, which makes it all the more important to know how to save and budget your money. Here’s how you can save up to buy your dream home.
Pay off your current house
Before you leap straight into plans for buying your dream house, a first step that’s recommended is to pay off your current house. With your house debt cleared and out of the way, you can focus your funds on your dream home instead. Even if you can’t pay it all off completely, you can try to put any extra money you earn into down payments that can help build your equity. Bigger down payments can reduce your loan balance, which enables you to receive more money when you sell the property.
Get a mortgage
Once you’ve calculated your equity, you can proceed with your plans to buy your dream home by checking the amount of money you have accumulated. If you’ve been really diligent with saving up money, it is possible to buy a house with cash, but most people choose to get a mortgage. There are different mortgages, or home loan types to choose from, such as a 15-year or 30-year mortgage. Both have fixed rates and are recommended to people who want to live in the same location for many years. While the 30-year mortgage is said to be the most popular choice for many aspiring homeowners because of its lower monthly payment, some would recommend choosing the 15-year mortgage. Although it does have a higher monthly payment, it also means that you can pay off your mortgage faster.
Have some extra funds
When saving up for your dream home, don’t forget to consider other fees involved like the closing and moving fees. If you have any envisioned customizations or renovations that you’re hoping for in your home, those would require additional funds as well. Keep in mind that there’s more than just the monthly mortgage payment that you have to pay– there’s also taxes, utility costs, and other related fees. So while the idea of finally obtaining your dream home is exciting, make sure to always have some extra money available for any added costs or emergency funds.
Living in their ideal house is a dream for many people. Knowing the costs that are involved may be rather intimidating for some, and this may discourage them from pursuing their dream to become a homeowner. However, it’s not impossible to achieve your dream home. If you’re determined to make that dream house a reality, with some effort, knowledge, and the discipline to save up money, it’s possible to purchase your dream house and enjoy it for many years.