According to research, only 7% of the population have a home by the time they turn 25. The only reason behind this low percentage is that most people fear committing to such a big asset or have no knowledge to save money in an efficient way to buy a house.
But if your dreams are bigger than others (as they should be) and you want to buy your dream house, here are 8 tips that you can follow. Make sure you read until the end and make notes because these points are going to show you the correct way to make your dreams a reality.
1. Start earning early
Earning from a young age is the first step towards buying your own house. Because when you start earning early, there isn’t much pressure of family or risk involved. You have time to save the money bit by bit and get it ready for the down payment.
Once the money starts flowing in, there is also ample time to build a good credit score. So, if in case you don’t have finances to fall back on, you can always opt for credit.
2. Track finances to save money
While earning early plays an important factor, managing those finances is even more important. If you don’t take care of how you are spending money, you won’t ever save enough to actually think about buying a large asset such as a house.
Make a plan and list out all the areas where you are spending unnecessarily – grocery, travel or clothes? You don’t need them manually.
There are several apps on the internet that specifically cater to these needs and help you plan well. Make a budget and stick to it, it will definitely help you out in daily life as well as long term.
3. Choose your house wisely
Let’s be honest here, we cannot have a house like that of Queen of United. So, instead of putting our minds towards something that’s far from reality let’s plan what’s possible and figure it out together. By figuring out I mean choosing your dream home wisely.
Always go ahead with a house that can meet the needs of your family and still fit into your “dream house goals”. And frankly, there are quite a number of options available to bring your imagination into reality.
Even if you are single, avoid those kinds of homes that are too big for a nuclear family, as these factors directly affect the price of the house.
4. Invest wisely
Just saving your money into your bank account isn’t going to give you good returns. So, you must consider investing your money in the right proportion, in an asset class with greater ROI.
For instance, putting your money in mutual funds and stocks will give you higher returns than FDs. but investing in these two places also comes with a lot of risks. So, carefully assess everything and then make an informed decision.
5. Make an emergency fund
Buying a house is a big commitment. It will consume a large part of your income rapidly. Earning early definitely gives you leverage but there’s a possibility of exhausting a darning amount of money in the down payment and the EMI.
That’s why always keep an emergency fund ready. All these months, if you face a difficult situation, you can fall back on that safety net and not accumulate any debt.
6. Improve credit score
Starting early gives you an ample amount of time to get a credit card and build good credit points. A score above 725 does not only improves your chances of securing a home loan, but you also get the benefit of applying for higher amounts.
So, if you don’t have a credit card now, make plans to get one and when you do, make the payments properly. Pay your bills on time, diversify your credit portfolio and retain accounts that are related to your credit history.
7. Don’t forget about other costs
Just when you thought it ended, it didn’t. Well, it turns out, a down payment isn’t the only payment you’ll make.
There will be other expenses involved in this processing such as stamp duty, registration costs, attorney fees, insurance, and brokerage fees. So, make sure you have some extra savings for bearing them as well.
Buying your first home doesn’t have to be overwhelming and with these tips, I am sure your process will become much easier.