A home of one’s own is one of the biggest, safest investments there is. Its value appreciates and, if your heirs plan to stay put, it’s a great legacy to pass on to the future generation.

It’s better than renting, which doesn’t have tax deductions. Congress has even sponsored the First-Time Homebuyer Act, which gives first-time home buyers tax credit of as much as $15,000.

A home, however, requires serious money. So the time to start saving is now.

Some tips:

Create a separate account
Columbia University Associate Professor Michaela Pagel says this is step one in saving for a home. She’s all for having an automatic withdrawal to an investment account as soon as one’s paycheck arrives. This way, the money stays intact for future purchases. But she qualifies that one can only do this after high-interest, unsecured debts like credit cards are paid.

Managing a separate account also means keeping an eye on personal bank statements and credit card payments. Compute expenses for necessities like rent, student loans, and utilities. Then, calculate how much nonessentials like entertainment, shopping, restaurants or takeout cost monthly.

The next step is setting a budget that covers the basics and discards nonessentials. This forced savings is compulsory.

Invest any extra money
Resist the urge to splurge after receiving a bonus at work, tax refund, and/or a windfall. Deposit it instead in a separate account where out of sight hopefully means out of mind.

Move somewhere more economical
Move to a smaller, less costly place in a more affordable neighborhood. Invite a roommate to share rent and/or expenses. If you’re single, ask if you can live with family or friends for a year.

Reduce retirement contributions
The extra cash can go into your house fund.

Curb your buying enthusiasms
The pandemic may have forced us to delay big-ticket gratifications like exotic getaways, a new car, gym membership, and the like. However, the accumulation of “small” online purchases while hunkering down at home adds up – think of the stuff you consoled yourself with – wine, takeout dinners, celebrity-endorsed merchandise, paid subscriptions to streaming channels, and impulse buys on whatever is viral at the moment. Unsubscribe from marketing emails that offer deal after deal.

Get mortgage programs with lower down paymentsCheck out the FHA (Federal Housing Administration) loan, which offers down payments of only 3.5% of the home’s purchase cost. It also grants realistic interest rates and approval even with less-than-impressive credit scores. Consider applying for VA Loans of USDA loans. Research on down payment assistance plans that minimize the amount of money borrowers must shell out.

Cut down on debtDebt-to-income (DTI) radio is one of the first things lenders examine in considering a mortgage candidate. More debts lower one’s chances of getting a home loan. It also leads to higher interest rates. So go easy on those credit cards.

Get a side gig
Try freelance work and side jobs – driving for a rideshare company, going for a bunch of one-off projects, etc.

Rent out that extra room or parking area
Try listing that extra room or parking space on online hospitality websites where you can control who uses your space and when.

Seek help
Don’t be ashamed to crowdsource funds through social media. Ask friends and family to send money instead of physical gifts on special occasions.

If you want to buy your first home in North Central Washington, call Coldwell Banker Real Estate at 509.888.8887 or drop us a line at info(at)cbcascade(dotted)com. We’ll gladly show you homes that fit your lifestyle and your budget.

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How to save for your first dream home