5 Reasons To Save Money for Your New House
Purchasing a home is the largest investment most people will make in their lifetimes. Because of this, most buyers need to obtain financing. However, it is important to also save up some cash before you make a home purchase. These are five reasons to save money for your new home.
1. Allows You To Customize Your Home
Few buyers can find a home that is exactly what they want without making any changes. Having some extra money to play with makes it possible for you to customize your home so that it perfectly fits your needs. Don’t like the flooring? Want to get rid of that ugly wallpaper? Have you always wanted a pool? Want to upgrade to some high-quality true refrigeration appliances? If you spend every penny you have on your mortgage, you won’t have many options; however, if you have some cash in the bank, you can outfit your new home exactly the way you like.
2. Saves You Money on Your Mortgage
There are a variety of ways that saving some extra cash can save you money on your mortgage. The first one is that it increases the amount of down payment you can make. The more money you put down on your home, the less you have to borrow. The less money you borrow, the less you will pay in interest over the life of the loan. Second, extra cash provides you with options such as purchasing mortgage points to lower your interest rate. Finally, having some extra cash available makes it easier to double up on payments and shorten the life of your loan, which will also save you money on interest payments.
3. Increases Your Purchasing Options
Even for people with good credit, there is a limit to how much money a bank will loan on a house. The more money you have to put down, the more houses you can buy. Additionally, cash on hand means that you can give more consideration to purchasing a house that needs some work done. You might be able to get a home improvement loan to remodel or repair a fixer-upper, but you can avoid taking on additional debt and having to deal with getting a loan approved by having the cash you can use to make needed repairs and upgrades. If you find a house that is perfect for you in every way, except that you need an extra bedroom, garage or office space, you can use your cash to make that happen.
4. Provides a Safety Net
Things go wrong even with well-constructed houses. Homeowner’s insurance will protect you from some types of damage, but it doesn’t cover maintenance costs. If the furnace or air conditioner goes out, the hot water tank breaks or the plumbing needs replaced, having cash on hand for emergency home repairs will be much less stressful than having to scramble to borrow money. Additionally, it makes it easier for you to keep up with regular maintenance, which can help prevent some problems from occurring. An emergency fund is also a nice thing to have to cover your mortgage and other expenses if you unexpectedly lose your job, become ill or have some other unexpected drain on your finances.
5. Gives You a Landscaping Budget
A well-designed and maintained yard can drastically improve the curb appeal of your home and increase your enjoyment of your property. However, professional landscaping can be expensive. Saving up some money before you make your purchase makes it possible to increase the function and aesthetic appeal of your landscape. Additionally, you can add landscaping features that help protect your home from damaging floods, soil erosion, windstorms, earthquakes and other natural disasters. If you live in an area with frequent severe storms, you might also consider adding a storm shelter.
A new home is a huge financial investment. Saving money before you make your purchase provides a variety of benefits that can make home ownership more attainable and enjoyable.
