Want To Own A Home? Know How To Save

Buying a home for the first time can be overwhelming for a first-time home buyer

because few home buyers know where or how to begin the search to buy a home. The first home buying step should be to align yourself with a professional who has experience working with a first-time home buyer and will show you the ropes.

It isn't always an easy process to buy a home. Many home buyers encounter obstacles, and it's not unusual to run into flying monkeys and wicked witches along that yellow brick road to home ownership. The primary step in home buying is to prepare for the obstacles. Buying a new home is such a major purchase that it can probably be one, if not, the most vital purchase in an average person's life. For most people, purchasing a home is their ultimate goal. Thus, making the necessary preparations before starting the purchase process is as important.

A major part of one's preparation is to save money strictly for this purchase alone. Even with easy financing out there, one still has to come up with the cash for down payment, closing costs and other related expenses. The first rule of saving successfully is to know how much you need to save. This way, you'll plan by knowing how long you need to save and how much you need to save on a daily or monthly basis. On a related note, know precisely how much you can afford to buy. As a rule of thumb, you can obtain a home that costs up to twice your gross annual salary, only if you do not have other huge money obligations like serious credit card debt or paying alimony.

With a clear goal in mind, reassess your lifestyle so that it will be in line with the goal of buying a house. Therefore, strive to live simply and refrain from unnecessary purchases. An effective tactic is to treat your savings as an expense, wherein you deduct the amount you save from your salary before you spend any of it. Open a dedicated checking account that has a facility where you can electronically deduct your savings from your salary account.If you're a new home buyer, there are some ways to get additional funds into your savings. One is to make a loan from yourself by tapping into your 401(k) or retirement plan.Lastly, you can tap into family connections particularly if you've got generous and rich parents. Your parents can give you up to $13,000 a year (the 2009 limit) without them having to pay a gift tax.

Pride of ownership is the number one reason why people yearn to possess their home. It means that you'll be able to paint the walls any color you want, turn up the volume on your CD player, attach permanent fixtures and enhance your home according to your own taste. Home ownership offers you and your family a sense of stability and security. It's creating an investment for your future too.

by: Tara Millar

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