Save for Your Mortgage Now

Sometimes you have to do things in steps or stages in order to achieve the final outcome. A sports player must practice every day or a few times a week, play a number of games and scrimmages before the player will be ready for the championships or finals. In this case, think of your mortgage as the ultimate “final,” and think of your savings account and money management skills as your “practices.”

There is no way to know for sure if you are financially ready for a mortgage. You have to know, by the confidence you have in yourself, your savings and your money spending. Applying for a mortgage is more than saying that you need a home. It is saying that you are able to afford a home loan, and that you are financially stable and secure enough to pay off that loan over a number of years. Usually, these are claims you can make only if you have proven yourself reliable and trustworthy with money in the past.

Think about your spending habits. Most people do one of three things with their monthly income. Some spend a good chunk of it on things they have been wanting and save hardly anything. These kinds of people are often the ones who go into debt, spending more than they have. Then there are some that save most of their income and spend only a small portion on necessities such as bills and food. Others spend a little bit on leisure but also put a lot into savings.

Remember that you will need to save for a down payment. You are not going to miraculously come up with all of the fees to buy a home at the time that you want to purchase the home. Like any large purchase or investment such as college or a vacation, you usually have to save well in advance to afford it.

For the down payment, expect at least 20 percent of the home’s value, and don’t forget that there are a number of closing costs and other miscellaneous fees you will be charged a fee to close on your home and to process your mortgage.

You may not be the most frugal or responsible person with money now, but there is always room for change. Even if you start changing your spending habits a little bit each month, there will be a big difference in a year.

All you need to do is trim your budget. Skip out on that extra coffee, coca cola, pack of gum or cigarettes. Buy more generic brands when grocery shopping. Make sure you look for the gas station with the lowest rate. Don’t spend money on outings or commodities that are not essential or high on your priority list. You cannot have everything, do everything and be everyone. If you want to own a home some day, you need to plan ahead and save.