In June 2020, the median price for existing homes was $295,300. Depending on where you live, that number could be much higher for the property that you desire.
Regardless of exactly how much a house costs in your local area, one thing’s for certain: you don’t have the entire amount in your bank account. You might not even have enough to cover the down payment!
For most people, it’ll take long-term savings and the help of a mortgage to buy the home of their dreams.
So how do you save up so buying property is feasible? Read on to find out!
Consider Something Reasonable First
If you make a modest salary, aiming for a multi-million dollar mansion probably isn’t very realistic. You can save all you want, but you’re just never going to afford that property (unless you get a huge raise or win the lottery).
So for those of you with very little income, think about going for foreclosures as your first property. For example, URB has some Chicago real estate foreclosures where you can purchase properties with great financing and small deposits. This will make property ownership a more reasonable and feasible goal.
Avoid Risk-Type Investments
Putting some money into stocks can be tempting, but it’s not very wise for a long-term goal like homeownership. While it’s true that a good investment can gain you the down payment you need in an instant, the opposite is true as well. You can lose a good chunk of money in a flash too.
Instead, you should go for something safer that’ll have a better chance of a return in the long run. For example, you can get a certificate of deposit (COD) or just deposit your money into your savings account to get your interested back.
Save Windfalls
Let’s say you get lucky and your parents gift you a few grand for completing grad school. Instead of spending this money on a new gaming computer, it’s best if you put it straight into your savings account.
It may not seem like much, but over time, all these windfalls will add up. They’ll significantly speed up the timeline for you hitting that down payment amount!
Always Have an Emergency Fund
With that said, you’ll still want to have an emergency fund. In fact, you should build up a nice cushion before you start saving for a home.
By practicing responsible personal finance, your savings plan won’t get ruined if you run into some unexpected hardships. You’ll be able to draw from your emergency fund instead of the amount you’ve saved up for a down payment!
Go About Your Long-Term Savings in a Smart Way
If you’re smart about your long-term savings, you’ll be setting yourself up for a better future. Not only will you be able to get that dream house of yours quicker, but you’ll also be able to make big purchases faster and with less stress.
If you’d like more advice on buying a home, check out our blog page for more helpful articles!
