Buying a house feels like a gigantic financial mountain to climb to almost anyone, especially when you’re at its foot – the initial investment. But just like mountain climbers rely on their gear and preparation, you have various tricks and strategies at your disposal to help you push through.
Whether you have your mind set on the best Sea Pines real estate or something a little more modest, we’ve compiled a set of universal tips that apply to any future homeowner.
Pay Off Your Credit Card Debt
Credit card interest rates are generally much higher than the mortgage interest rates because they aren’t guaranteed by physical property, which makes paying this debt off sooner rather than later a priority.
Furthermore, if you dive into another venture that you’ll be paying off for an extensive period of time as well, like buying a house, without being done with your credit card duties, the compound debt might start weighing on you both financially and psychologically.
If possible, it’s better to pay off as much of your credit card debt as possible, so you can start looking at houses with a clean slate.
Round Up Your Bills
A lot of people have heard of this method, but not that many believe in the difference it can actually make over time. You’d be surprised by the small fortune that the change, spared from rounding up your bills to the nearest dollar, can accumulate to.
In fact, you don’t even need a piggy bank anymore –some banks offer apps that round-up everything you pay with your debit card and tuck away the rest.
Don’t Spend All of Your Tax Refund in One Place
Few things in life from a material nature can rival the feeling one gets from a juicy tax return, but that doesn’t mean you should just squander it. After all, that’s not free money, even though it feels that way.
Nobody is saying not to live a little, but if you’re planning on buying a house, a tax refund can alleviate the burden that is the down payment.
Save Performance Bonuses
Performance bonuses are another little surprise you can’t count on, which makes it perfect for your savings account. Not to mention if performance bonuses go toward buying a house rather than a night of heavy drinking, the incentive for earning them might be even bigger.
An Automated Savings Deposit
You can set your checking account to transfer a fixed amount of money on a specific day of every month to your savings account. Not only is that a generally more organized way to stick to your goal, but skipping a month goes through a cancelation procedure that makes the deviation from your plan more palpable and official in your mind, possibly evoking guilt that will likely bring you back on the right track.
Alternatively, you can simply transfer money on a set day every month, but this way isn’t as solid, especially for someone who has a tendency of giving in to temptation easily.
Credit Card Cash-Back Earnings
Your credit card cash-back earnings are something else that can add up to a substantial amount of money over time, as long as you are diligent with paying off your balance on time. Some cards go as high as 5% back from purchases in certain categories.
401k Loan
Borrowing from your employer -sponsored 401k can solve a lot of your immediate financial problems as once, considering how high the limit is – roughly $50,000.
With that being said, there’s a catch – there’s typically a 2% interest rate. Furthermore, taking the 401k loan before actually applying for the mortgage loan will affect your credit score, and could respectively increase the interest rate, not to mention possibly even cast doubt in your trustworthiness in the eyes of the bank.
To make sure you avoid any such hurdles, resort to 401k loans only for down payments under $5,000 or to top off a sweeping financial strategy.
Downgrade Your Car
Unless cars are your weakness, they tend to be unnecessarily expensive, especially when you consider the overall cost of their maintenance and the fact that at the end of the day, a very cheap vehicle can also carry out these machines’ primary function – taking you from A to B.
Downgrading your car can give you a significant breathing space to work with toward the more important goal of buying a house.
Get a Second Job
Work arrangements are more flexible than ever, with freelancing and remote work no longer being anything out of the ordinary. You can probably supplement your income with some work on the side that makes use of your existing skills.
Saving for a house is a taxing process, but can also go fairly seamlessly with the right plan and consistent effort.
