How Young Parents Save for a First Home
Saving for a first home can be a major challenge for young couples who are already parents of young children. It’s tough enough to raise a family in the turbulent economy of the 2020s. Add in the sometimes-daunting task of setting aside enough capital to cover a down payment on a house, and the chore is nothing short of formidable. Reworking the monthly budget is the initial step for most moms and dads. After that, they usually consider applying for a personal loan to get rid of credit card debt, consult a reputable realtor, take on a part-time job, and explore the rent-to-own housing market for special deals. Review the following points and see which ones can help you jumpstart your effort to fund a special account for acquiring a first home.
Revise the Monthly Budget
Look for personal finance challenges and holes in your budget and make commonsense revisions. The general aim is to make an automatic set aside for a down payment account. Consider working with the bank to create a direct deposit payroll deduction of a fixed percentage every payday. Explore making cuts with line items like discretionary spending, cable TV subscriptions, and similar expenses that can be reduced or eliminated. Speak with a licensed realtor to find out how much a typical down payment is in the neighborhood where you’re looking. Realtors can give solid advice about closing costs and other first-time buying expenses.
Get a Personal Loan & Pay Off High-Interest Debt
Younger dads and moms who use personal loans to banish high-interest credit card debt are taking a decisive step toward homeownership. Of course, it’s all too easy for parents to get underwater in card debt. That unfortunate situation is particularly true when working adults have more than one card account. Fast rising interest rates can turn a standard credit card into a nightmare in a short period of time.
The good news is that there are several realistic alternatives that allow moms and dads to consolidate all their high-interest debt and make monthly bill paying easier than ever. Personal loans can do all that and more because they also let borrowers take advantage of more favorable interest rates. Switching card debt for a personal loan makes sense from every perspective. Not only can you select the lender you want to work with, but you can get a more flexible arrangement, better terms, and a faster route out of debt. At that point, it’s much easier to focus on long-term financial aims for your family.
Consider Rent-to-Own Properties
Rent-to-own real estate is a popular choice among first-time buyers who have not been able to save enough cash for a down payment yet. The way it works is simple. Sellers agree to let you live in a house for about two years while you make payments that consist of a monthly lease payment and a portion that is set aside for a potential down payment on a purchase, should you decide to buy the property when the short-term lease is up. In most cases, if you decide to bail out of the deal at the end of the rental period, you’ll lose the built up down payment savings that have accrued.
But, for those who do decide to buy, they get the benefit of having an account already funded and ready to go. RTO can be a solution for young people who want to take a different approach to saving for a first house. The beauty of the strategy is that you get to see and experience ownership before becoming legally obligated to a long-term mortgage loan. Plus, most RTO deals allow renters to share repair expenses with the owner. That way, you’re not on the hook for a major bill if something needs to be fixed during the lease term.