How much should I invest/pay every month?
After you have obtained a gross estimate of the amount that you need to accumulate to buy your own house, divide it by the number of months you have until the purchasing date. Now, this is the money you need to set aside every month. If the amount seems a bit too much to you, try this:
- Increase the duration of the denominator or the number of months that you want to wait before purchase.
- If the savings per month is not too high but you would still like to bring it down a bit, do that. Carry out depreciation of five percent and set the resultant amount as your outgoing deposit per month. The depreciation will be compensated by the interest which is definitely going to be more than five percent for long-duration savings deposits.
For example, if you've decided that you want to have a deposit on a home in 24 months for $50,000 then you monthly savings contribution should be $2,083. If you have planned to buy the property now, look for a good loan service provider. Four things to keep in mind while selecting a good one :
- They should be well known.
- They should be backed by sound experiential opinions or recommendations from someone whom you know has reaped benefits from them. The person who recommends it should have a trustworthy image in your view too.
- Their operations should be smooth and seamless.
- Look for any red flags. These could be probable court disputes about customer money stuck in schemes or any indicator of unreliability.
After you have selected a good loan facilitator, do the necessary paperwork and keep all photocopied versions of documents with you as proof. That way, no one can meddle with your assets.
Where do I hold my money to buy a house later?
A sound recommendation would be to begin saving in a high yield savings account. There are numerous options that will pay you 1 to 3 percent per year on your savings, and the best part of these accounts is that they’re 100% liquid. Meaning whenever you need to purchase the home, or if it’s the “perfect” time, then you can use those funds. There are also no fluctuations in these accounts when compared to holding the funds in a stock market account, you wouldn’t want that perfect time to come around only to find that the stock market it down and you have to pull funds out while the account is down. Set up auto transfers into your high yield savings account, and begin contributing a portion of each paycheck towards your home. And this is a group effort, if you have a significant other, you can set up a shared goal with them where you will both be contributing to one fund to achieve the goal in half the time.
In sum, congratulations on focusing on homeownership. It’s quite the process, but with some planning, your dream of owning a beautiful home is only a dedicated plan away from becoming a reality. Happy buying!
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