Whether you’re currently scouring the market for your dream home or it’s still a few years down the road, saving up for your first real house can seem like an incredibly daunting task.
Michelle A. Alvarado, a Home Lending Officer at Citi, understands the fear that oftentimes accompanies this important life moment, but points out that preparing to buy your first home doesn’t have to compete with your wellness habits—actually, it's helpful to think of the process as something that will benefit them.
“Home ownership can provide a rewarding experience and boost your overall wellness meter,” Alvarado says. “What better way to relax than to meditate in your own garden, or have a cold drink on your balcony on a warm day? These are the sweet rewards of saving for home ownership.”
It's official: Your wellness routine and home owning aren't mutually exclusive. To find out how all that works, Alvarado is sharing four things to keep in mind if you want to save up for a home (and still aim to have the freedom to live your best life).
Keep reading for Alvarado’s 4 key tips for saving for your first home—without sacrificing Sunday brunch.
1. Make a list of priorities
Are you looking to buy a home tomorrow? Do you want to live closer to family? Do you mind driving or prefer a shorter commute? These are some questions Alvarado suggests mulling over prior to executing a savings plan.
The same thing goes for what you envision in your future abode. "Make a list of home features you prefer, like a large kitchen, a bath tub versus just a shower, a backyard, the number of bedrooms, and more," says Alvarado. Putting your must-haves down on paper will help narrow the choice of homes and price ranges for you to consider.
And although it might seem like it's the right moment to start hardcore budgeting, Alvarado says you should still take advantage of the benefits of your various memberships, such as the gym, yoga, regular facials, and other self-care routines. "Decide where home ownership sits on your priority list, and make the necessary adjustments to create a balance," she recommends.
2. Determine what you can afford
Now that you've defined your goals, it’s time to get to business. Start by assessing where you are financially, so you can find a home that fits into your lifestyle—not the other way around.
“There are calculators on the Citi website to help you determine how much you can afford based on the monthly payment you’re ready to make—both financially and mentally,” Alvarado notes. “You can also set up an appointment to meet with a Home Lending Officer face-to-face and go over all the numbers together.”
Once you have an understanding of your financial resources (along with when you want to move and how long you plan to stay), you’ll be able to piece together the type of mortgage that’s best for you. Be sure to also keep in mind additional costs that will come with buying a home, such as closing costs, as you go through this process.
3. Put together a budget
Take a look at where your money is being spent—and be honest. If you devote $100 a month to your gym membership and about $50 a month to coffee, then put that into the budget. Once you know the exact amount, you can start saving strategically by figuring out what should stay and where you could cut back.
This is when you can begin setting money from each paycheck aside. It doesn't have to be a large sum of cash every month, just enough to put you closer to your home-buying goals.
“Set up a new savings account and automatically have the amount transferred there from your existing account, or automatically deposit savings straight from your paycheck," Alvarado suggests. This way, you won’t even notice the money being taken out, and it'll continue to grow even when you decide you just have to have an afternoon matcha.
4. Create a timeline
Regardless of when you want to put down a payment on a new home, sketching out the roadmap to get there gives you a bird's eye view that allows you to determine when you should pull back or can splurge as you see fit.
“The amount you start saving will depend on whether this is a short-term or a long-term goal, and what your budget will allow,” Alvarado says, recommending you start a timeline as soon as you feel the home-buying itch.
By taking this proactive approach, you put yourself in control over the process, and can create the budgeting timeline you need to allow for the things that matter to you most (looking at you, Saturday morning spin class).
Michelle Alvarado NMLS 726593, Citibank N.A. NMLS 412915. Equal Housing Lender and Member FDIC.
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