Don't rush into buying a house until you're ready. Prepare with funds for emergencies, as well as the unforeseen expenses and moving costs that follow closing.
- Step 1: Research homes, educating yourself about lenders and comparing rates, points, and fees as you save. Try to protect as much cash as you can by picking the best time, and home, to buy.
- TIP: Make sure that when you work with a Realtor or buyer broker to represent your interests that they are not also the sellers of a property. Working both angles presents a conflict of interest.
- Step 2: Get a buyer broker -- once you've picked out the house -- to represent your interests. Your savings make buying a home possible, but there's no reason not to keep any extra cash for future expenses if you can buy something below your original price range!
- FACT: The American Recovery and Reinvestment Act had given tax credits to more than 1.4 million taxpayers for improving their homes by 2009.
- Step 3: Build a strategy for short-term savings, setting aside 20 dollars, or more, per week. Projecting a target amount to save by the end of the year invites too many situations to interfere until the goal is compromised. Make them more immediate.
- Step 4: Take out a consolidation loan to chop down the huge interest on your credit cards by paying them off. The savings from this strategy can become the amount you deposit in an account toward buying a home. This will improve your credit standing for qualifying later on the home loan.
- Step 5: Keep your monthly bills and expenses at 60 percent of your income when planning to buy a house. The additional 40 percent can be divided into savings for your home's down payment, retirement savings, other savings, and a little left over for fun.
- Step 6: Establish a plan to put away an amount of money equal to whatever you spend on indulgences. If you can't match that amount, don't spend it. Stick to your priorities and deny yourself shopping for luxuries like clothes and shoes.
- Step 7: Avoid purchasing things on impulse, especially on a credit card. Be patient and learn to limit credit card purchases to those you can pay off in full each succeeding month, declaring a 24 hour waiting period to be sure any item is something you actually need.
- TIP: Every dollar in interest that you dodge becomes, in essence, a guaranteed, tax-free return.
- Step 8: Eat out less often, and be smart about your food purchases. Buy food and other things in bulk and bank the money saved. You can save even more if you bring your lunch to work.