The San Diego Union-Tribune (TNS)
If one of your New Year’s resolutions is to become a homeowner, now is the time to start a plan to save for that new dream house. While a 20 percent down payment is often no longer necessary, you’ll still need a bit of savings even for lower rates in San Diego’s pricey housing market. And keep in mind, a larger down payment might save you money in the long run.
Here are some tips to get you serious about saving:
—Make a plan
First you’ll need to have a financial goal. Calculate how much you will be able to pay for the monthly mortgage (online mortgage calculators can get you started). The rule of thumb is that no more than 28 percent of your monthly income (before taxes) should go toward housing, which includes the mortgage, taxes and insurance. Once you figure out how much you can spend on a house, consult with a lender to decide on a down payment that will work for you.
—Get rid of debt
Paying off your credit cards will not only save money on those high interest rates, but it also will help you qualify for good loans.
To make sure your housing fund grows, open a dedicated savings account. Then have a portion of your paycheck automatically deposited into the account. The separate account will help reduce temptation to use the money for other things. To make the account grow faster, try to deposit your tax return.
Every little bit helps. If you stop for coffee on your way to work, start making it at home and bringing a thermos. Then each week, put the money aside that you would have spent on your morning — or afternoon — buzz. Look at all your expenses, from restaurants and movies to cable television, wireless plans and gym memberships. Many items can be cut or reduced. And don’t forget to rethink the high-ticket items such as your annual vacation. Make it a camping trip or a “staycation” and put the difference into your account.
If you’re renting an apartment, consider getting a smaller place to save on rent. The cramped space won’t seem so bad when you know it’s only for a limited time and it’s getting you closer to your goal. According to USA Today, moving from a two-bedroom to a one-bedroom apartment can save 20 to 30 percent on monthly rent. If you can’t get out of a lease, consider getting a roommate to take a bite out of the rental payment.
Volunteer for overtime or even get an additional job. For many, this will be the only way to save enough money for a home because of other demands for the regular paycheck.
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With a bit of determination, you can save 10 percent of your income each year. Cut out a picture of your dream home and hang it on the fridge. It will help you keep your New Year’s resolution when you’re packing lunch for work.
For more information on real estate and recent Home Pride columns, visit: sandiegouniontribune.com/news/business/real-estate/home-pride.
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