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6 Tips for Saving for Your Dream Home

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Hoarding cash is about as much fun as going for a root canal appointment. Saving for a home is no different. You need some grit and determination to get to the finish line. Below are some first-timer tips to on how to save for a house.

1. Family Gifts

Do you have well-off parents? Can you convince them to help you raise the down payment? This is a great way to get the first hurdle over and done with.

2. Go for A Fixer-Upper

A luxury condo might be a great idea, but it doesn’t quite fit into your budget right now. A fixer-upper will cost you much less and will give you the opportunity to customize it based on your taste. You will be able to spread out the down payment of the home over a few years. Don’t go for a dilapidated house just to make a saving, it might end up costing you more in the long run. Look out for semi-fixer-upper that is in a less than pristine condition. This way, you will be able to move in immediately and update some of the areas that don’t match your standards later.

3. Sell Some of Your Stuff

You can make a tidy sum of cash by selling the stuff you no longer use on craigslist or eBay. You will also have an easier time moving since you will have less stuff. You’d be surprised to know how much stuff you own but don’t use. Go on, turn that trash into cash.

4. IRAs

You can choose to retire later in exchange for a home today. You can do this by using the money in your IRA to buy a house as long as you are a first-time homeowner and you have had no financial interest in one. Better yet, you will be exempt from the 10% early withdrawal penalty. You’re allowed to withdraw up to $10, 000 to help with the costs of purchasing a home. If you have a spouse, you can both withdraw from your individual IRA accounts. This gives you a total of $20,000.

While you get to avoid the withdrawal penalty, you will incur tax charges on any money you withdraw.

5. Ask Your Boss for Help

If you’re employed, you can try asking your boss for an advance or a raise. You could also try to take a benefit in form of cash. While this is a tricky situation for your employer due to the impact on their accounting, it can never hurt to try. If you work for a family-friendly company and are about to have a baby, do not hesitate to bring it up during the conversation.

6. The Government Can Help

Are you a young, lower to middle-income US citizen? The FHA (Federal Housing Administration) loan helps cash-strapped home buyers. You’ll only make a down payment of only 3.5% for credit scores of 580+. However, you will be required to pay mortgage insurance premiums.  The lower your credit score, the higher interest you pay.

7. Bank the Windfalls

Whenever you get a windfall from tax refunds, bonuses, gifts, commissions or even the sale of personal assets. Deposit all these unexpected funds into your savings account to fast-track the process of saving money for your home.

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