3 tips to buying your dream home

How to Afford Your Dream House

Dreaming of your home but worried about the cost? With some strategic financial planning, you might find that your dream home is more attainable than you think. Here are three key ways to make a larger house a reality.

1. Boost Your Savings with a Purpose

Increasing your savings is the most direct path to making your dream home affordable.

• Create a Budget: Track your income and expenses to see exactly where your money is going. Cut back in areas that matter less to you and direct that money into a dedicated home-buying fund.

• Automate Your Savings: Set up automatic transfers from your checking to a high-yield savings account. This ensures you’re consistently saving without having to think about it.

• Reduce Debt: Pay down high-interest debts to free up more of your income for savings. Lower debt also improves your credit score, which can get you better mortgage rates and loan terms when it's time to buy.

Smart Strategy: Once you know roughly what your mortgage payment would be, “pay yourself” that amount each month, ideally for 6 months or more. (If you are currently renting pay yourself the difference between your current rent and your estimated mortgage) This does two things, it proves you can comfortably handle the payment, and it helps you builds your down payment faster.

2. Increase Your Income

Finding ways to boost your earnings can help you save for your dream home sooner. Consider these options:

• Side Hustles: Take on part-time work or freelance gigs in your spare time. Platforms like Upwork, Fiverr, or even local opportunities can provide additional income.

• Invest in Skills: Enhance your skills or acquire new ones to qualify for higher-paying positions. This might involve taking courses, earning certifications, or attending workshops.

• Passive Income Streams: Invest in assets that generate passive income, such as rental properties, dividend stocks, or peer-to-peer lending. This extra income can be saved towards your down payment.

• Look for opportunities for a raise: Sometimes a raise is actually just a conversation away. Document your role and the value you bring to your company and talk to your boss about your compensation.

1. Optimize Your Mortgage Strategy

Choosing the right mortgage and maximizing your borrowing potential can make a significant difference. Here’s how:

• Shop Around for Rates: Don’t settle for the first mortgage offer you receive. Compare rates from multiple lenders to find the best deal.

• Consider Different Mortgage Types: Fixed-rate mortgages, adjustable-rate mortgages (ARMs), and government-backed loans (FHA, VA, USDA) have different benefits. Find the one that best suits your financial situation.

• Improve Your Credit Score: A higher credit score can secure you a lower interest rate. Pay down debts, avoid new credit inquiries, and correct any errors on your credit report.

• Get Pre-Approved at Your Bank: When you know you are ready to buy, your bank can help you start the mortgage process through pre-approval. Getting pre-approved helps you know exactly what you can afford, move quickly when you find the right home, and it shows sellers you are a serious buyer.

Take the First Step: Start Saving for Your Down Payment

With these strategies, affording your dream home is within your reach. The next step is to start saving towards your down payment. The best ways to grow your savings is to place your money in a savings account that will actually help your money grow or by creating an investment account.

Reach out to Emily today to explore the best savings account options to grow your money or Create Your Investment Account Today and begin your journey towards owning your dream home. By saving and investing wisely, you’ll be well on your way to making that larger house a reality.