Each year, Google releases the previous year’s commonly searched phrases and terms by category. One of those categories is personal finance. While the results varied (and if you were curious, the most popular search under personal finance was ‘how do student loans work’) many of the top questions revolved around buying and saving for the purchase of a home.
So how do you save for a home? And more importantly, how do you buy a home? You’ve come to the right place! We’ll help you understand some of the basics.
Let’s start from the top. How do you save for a home?
How to save…
As far as actually saving the money, there are many ways to do so. You can cut back on spending, pick up a second job, not take your annual vacation to the beach or even create a budget to help you reach your goal. Rome wasn’t built in a day, and your savings won’t be either. It’s going to take time even if you make all the right moves.
Where to put the money once you’ve started saving…
As you start saving, the most important thing to remember is that you want to put the money you’re saving in a stable place. What do we mean by that? You’ll want to avoid putting the money into high risk investments. Consider something a little safer like a Money Market account or a CD. You will earn interest in these accounts and don’t have to worry about a sudden stock market crash leaving you without your down payment.
There are circumstances where it would be ok to invest. For instance, you could invest your money while you save if you are years away from buying a home. While the market may fluctuate, you should be able to take your money out at a point that results in a higher return. If you are planning to buy a home soon, it’d be safer to put your down payment into something like a CD, but you typically need to have a decent amount saved up to open a CD.
How to track your progress…
Saving for a house is a long-term goal, but it is a goal you can easily track. When creating a savings goal, it is important to remember you’ll need to save for more than just the down payment. You will also have to pay closing costs, homeowners insurance, fees to set up utilities, and if this is your first house, you’ll probably need to buy some furnishings as well. This sounds like a lot but if you plan you’ll be thanking yourself later.
What to do after you’ve saved enough…
Now that you know more about how to save for a home, we can go into the home buying process. Fortunately, we have a whole blog we recently published on this process. You can check it out here http://blog.centralnational.com/2018/12/steps-to-buying-a-house/.
It’s important to remember…
When saving for a home, the two most important things to remember are to be smart and be patient. First, be smart about what you do with your savings while you build it up. Secondly, be patient, the process is going to take some time.
Whether you have a jump start or are starting from zero, you likely aren’t going to be buying soon. But if you are getting close to saving enough, you can speak with one of our friendly lenders to get the process of financing your home started. You can find your local lender on our website at, https://centralnational.com/whycentral/meetus.asp#mortgagelenders.
