If you think a bank or a lender will approve your loan application as soon as you send it to them, then you are probably mistaken. Unfortunately, those days are over for us now. Today, lenders want to see enough funds in your bank account as savings before they approve the loan for your first home. So, if you want to have the keys of your dream home in your hand, where you can live your life and fulfill your colorful dreams, you need to gather a big amount towards the downpayment. Buying a house with a mortgage can't be possible without patience and proper saving habit.
Apart from the loan, you will require at least 10% more to use as a deposit for the home. So, you can try some tips which may help you to grow the savings account balance:
1. Save from your every paycheck - This is the best plan you can adopt if it can be possible for you to stick to it. You simply have to save for your needs before distributing your income into various other subjects.
You may open a bank account and put your savings into it. It’ll be a wise decision if you open that account in a separate bank for your lender. By this way, the lender can’t easily access your savings. Don’t forget to save at least 10% of your total earning in there, you might need to skip several dinner parties or frequent shopping habits. Try building good saving habits and pack your food at home or avoid eating in outdoor plazas. Avoid getting a taxi, try to go on foot as much as you can. When it comes to the end of your pay cycle, you'll find that you’ve literally saved a certain amount in your account.
2. Sell your unused goods online - There are many websites who will sell your stuff on behalf of you. One of them, eBay is doing great when it comes to offloading your old household things and getting solid cash in return. If you’re getting money from online, that’ll be the best way to earn and save for your new home. From old books and CDs to unused furniture, playing kits and clothes; you can arrange hundreds of dollars for yourself within a few days by selling your unused stuff through online shopping portals.
3. Manage your debts properly - You can't consider it as a direct option to save money. Paying off your debts will gradually increase your credibility to borrow money from the lenders. If you pay off all your debts on time, your credit score will increase. A good credit score will help you to get better deals while applying for new loans. It’ll also free up your cash to pay mortgage installments. Managing your debts can also help you to create and maintain a proper budget.
4. Avoid luxurious spending - It will be hard initially, but once you start it, you will see how good you can manage your extra expenses. Tighten your budget a bit to avoid unwanted costs, it’ll be an excellent idea to save few bucks daily. Downgrade your lifestyle a bit, so that you can remove luxuries from your life. You don’t need to remove every habit immediately, however, start one item at a time and then move on to the next item. Within a year, you can surely save a few thousand dollars just by removing few old habits and choices. You can do these:
- Put your cable subscription on hold for one month (You’ll save $100)
- Make your lunch at home and bring it to the office (You’ll save $300)
- For a month, don’t buy any new clothes (You’ll save $500)
- Stop going to a bar every week (You’ll save $100-$500)
5. Get a part time job - Apart from the cutting off expenses, you also need to increase your income for saving more. Consider looking for an additional job side-by-side with your permanent one. By working a couple of hours more in a week, you may earn $2,000 in a month and that’ll be a big amount. This way you can easily gather $12000 to $15000 within a year. You can try for several jobs like- part time writing for a newspaper, babysitting, teaching, data entry jobs from home etc.