As a potential homeowner, what do you think a healthy habit for homeownership would be? If you are looking at this picture above then you may have already guessed it: SAVINGS!!! As a potential homeowner (or even current homeowner), savings is a healthy habit for homeownership.
As discovered in my article, "Millenials and Real Estate" I briefly mentioned the numbers or resources to become a homeowner. Most millenials or people in general don't know how much they need to prepare to be a homeowner. My first initial thought would be to SAVE. We've all heard of that word. It may be hard to do because we think of all the debt that we have. I can't save because of this, that, and the other. Let's rephrase that and think of why you SHOULD be saving. You may want to purchase a home soon, you need emergency funds, you may need/want to purchase a car soon. Saving is a big key to life and now is the time to start saving. I have two ways to save for a big purchase such as a home.
The first start to saving is the 10% rule. This 10% rule is to save 10% of your net income each paycheck. Let's do the math scenario here. Let's say you just signed a new lease but you know this will be the last year that you rent. That means you have a year to save. In this scenario, you have a $45,000 salary and after taxes your salary is $38,250. You will then have a net income of $3187. In simplest terms, you should save at least $318 a month. In a year's time you would have $3,825 saved towards the purchase of a new home. For a $100,000 house, a down payment could be as small as $3,500. You have easily saved your down payment.
The second option could be to save your mortgage payment. For instance we could say that your rent is $900 but you could afford a $1200 in a mortgage payment. You set aside the extra $300 a month in the difference. The difference in savings is $3,600 and you have saved yourself a down payment and have gotten used to paying $1200 in a mortgage in the process.
Some people believe that just because you have purchased a home that the need to save is now out the window. WRONG. Remember as a homeowner, you are now in charge of maintaining your home therefore you should continue to save. By developing a savings habit now, you will continue to have that habit when you are a homeowner. It is important to develop the habit of savings as you may the leap into homeownership.
Did you know there are other savings with homeownership?
As a homeowner, you get extra benefits that help you in your savings venture and it is called EQUITY!!!! By purchasing a home, you are creating a nest egg Let's display the difference of savings while renting and saving while buying?