According to real estate economists, North Carolina has one of the most overvalued housing markets in the United States. That can make it hard for first-time homeowners to save enough for a downpayment. Fortunately, there are plenty of strategies you can use to reach your goal.
How to Save up for a Home in North Carolina
Most soon-to-be homeowners don’t have to save up for a 20% downpayment to snag a home. Still, it’s better to save as much as possible to lower your mortgage and insurance payments. Here’s how:
1. Take Advantage of Any Assistance You’re Eligible For
There are plenty of national programs and grants available to first-time home buyers. For example, the Down Payment Towards Equity Act awards up to $25,000 you can put towards a new home. There are even 4 first-time home buyer programs and grants in NC you could try.
2. Open a Savings Account and Automate Weekly Deposits
Set up a savings account online that helps you earn compound interest on your deposits. Even a 1% interest rate is better than nothing, but many 3% to 5% accounts are available as long as you don’t withdraw from the account. Keep up with your savings by automating weekly deposits. With high inflation setting in, getting good interest on savings matters.
3. Cut Back on Luxuries (Minus a Few Lux-Necessities)
Buying a coffee or ordering take-out every day starts to add up. Cutting back on these luxuries will help you save here and there, but you shouldn’t scrap everything. For example, a home security system is worth the costs and low-cost entertainment can help you stay motivated.
4. Create a Reasonable and Realistic Home Budget
To create a budget, start looking at what comes in and out of your bank account each month. Then, decide what you need and what you can place in your savings account each month. From there, look at your miscellaneous expenses and leave a bit left over for entertainment and fun.
5. Try a Hobby That Saves More Money Than it Spends
Many of your hobbies can be turned into a second job or a useful skill. For example, if you like to shop for clothes, consider learning how to sew. On the other hand, you could take a course on woodworking, so you can build your own deck, shed, or furniture for your new home.
6. Save Any Extra Income (Tax Returns, Bonuses, Tips)
Your tax return, year-end bonuses, and tips (within reason) don’t count as normal income, so they can be saved automatically if you don’t have any other pressing expenses. If you choose to pick up another job on the side, you can also deposit all of that income directly into your savings.
7. Downgrade Memberships or Cancel Subscriptions
Do you currently pay for a gym membership, streaming site, or any other subscription you haven’t used in a while? Do you use your membership frequently but feel you can live without them for a while? If you answered yes to one of these questions, cancel your membership.
8. Find a Roommate or Move Back in With Your Parents
Paying rent by yourself isn’t easy, even on a six-figure salary. There’s no shame in moving back in with your parents, but if that option isn’t available, try finding a roommate. That way, you can slash your expenses in half. A roommate could save you hundreds of dollars a month.
9. Pay Off Your Credit Cards and Reduce Your Debt
You probably don’t want to focus on paying off your debts when you need to work on your savings, but you need to lower your debt to improve your credit score. A great credit score will lower your interest rate on loans and give you more available cash to afford a bigger home.