How many times have you heard someone say buying a home is the biggest decision you'll ever make?
But then you knew that already. The real issue is that saving the money for a down payment is usually the only thing standing between you and the home you want. Getting past that hurdle means coming up with a plan and sticking to it. Well, we're going to show you how, one step at a time.
What's the right house for you?
Think of buying a home as a series of smaller goals. First, you need to figure out just how much house you'll need, where you want it and when you want it. Then you have to figure out how much houses like that sell for. Go to open houses and check realtor websites until you know what you want and what it will cost you.
Figure out how much money
you need to save.
Once you know the kind of house you want, then you'll know how much you'll have to save for the down payment. Ideally, you'll want to save at least 20% of the purchase price. Some lenders might take 10%, but making a larger down payment will save you money later with lower monthly mortgage payments. You'll also need to save for the closing costs, which usually range anywhere from 2% to 7% of the home price. If the amount of money you need to save sounds unrealistic, you may want to revisit your goals and see if there's anything that you're willing to change such as the size or location of the house or maybe just give yourself some more time.
Put your money to work.
You'll want to earn interest on your savings without exposing your money to a lot of risk, so stick to more secure investments such as short-term bonds and CDs. Or you may want to consider high-yield checking and savings accounts. And since saving is easiest when you don't see the money, we suggest setting up an automatic saving system. That way, you won't be tempted to skip contributions and spend the money. Out of sight, out of mind, as they say. Remember, too, that small amounts can add up fast, so starting small is fine as long as you start.
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Check in regularly and get
professional help when you need it.
Once you've started, don't stop. Keeping track of your progress month after month can help keep you motivated. And if you ever feel as if you need help, don't hesitate to ask for it. Regardless of how much money you have, every Schwab client can get a complimentary one-on-one consultation. Whether you need help with putting a savings plan in place or just want someone to review your progress to date, Schwab experts are ready to help.
