5 Ways to Save Money to Purchase a Home

One of the most common reasons people choose to rent versus buy is that they struggle to save money for a down payment or a mortgage payment. However, you don't have to continue throwing your money away on rent when you can make simple adjustments to your monthly budget, spending habits and outlook on ways to save money. Start with these tips to ultimately save enough funds to buy that dream home.

1) Open a Dedicated Home Savings Account

If you find yourself tempted to spend money you have built up in your checking account, opening a dedicated savings account to buy a home may help you resist the temptation. After analyzing your monthly budget, expenses and income, designate a percentage of money you can afford to filter into this special account. To help you resist the urge to tap into these funds, open an account at another bank so it's not as easy to simply transfer the cash into your checking account when you think you need it. Filter in more money when you receive bonus pay or receive unexpected funds so that all available cash is designated for buying a home.

2) Downsize Your Current Living Situation

If you want to save enough money to buy a home, you may have to make some sacrifices related to your current living situation. Although you may enjoy living in the city or like the ample space you have, downsizing from a 3-bedroom apartment to a 1-bedroom apartment in a less-expensive area will free up some funds for your home-buying savings account. Consider getting a roommate to help alleviate some of the monthly utility bills and provide assistance with your monthly rent.

3) Evaluate Your Assets

It's common to have more material items sitting around than you actually need. Assess items that you can live without, such as certain electronics, furniture or vehicles. Sell these items online and funnel the cash you make into your savings account. Living a minimalistic lifestyle can help you achieve the goal of one day owning a home.

4) Tweak Your Monthly Budget

Often times, you may not realize just how much you spend on luxuries each week or month. Sit down and calculate your projected expenses and then monitor these expenses for a month. You can easily document receipts and bills in a spreadsheet or word processing program to simplify the process. Once the month is over, take a look at overspending. For example, if you have subscriptions to online services, magazines or gyms that you do not utilize or find to be essential, cut out these expenses. Call your cable and internet provider to negotiate lower rates. If you find that your vehicle expenses are astronomical, consider ride share or carpooling opportunities to save money. Once you tweak your monthly budget, allocate more money toward your savings to help you achieve your financial goal.

5) Eliminate Credit Card Debt

High interest rates and balances on credit cards can negatively affect not only your credit score but also your ability to save. Assess the amount of debt you have and seek out ways to lower the interest and funnel a few more bucks toward these bills. For instance, you may qualify for a 0% interest credit card once you transfer balances from a high-interest credit card. Seek out introductory rates and take advantage of these savings to help you pay down the final bill.

When saving to buy a home, take small steps to achieve this goal and set a realistic timeline to pay down debt and build up your savings account. It also helps to consult with experts, like a Mortgage Loan Originator here at Equity Prime Mortgage to see how you can save for your dream home.