The idea of buying a new home on the Costa Blanca excites many homebuyers. The step from wanting to buy a house to deciding to buy a newly built house can be a big one, though. For many homebuyers, this feels as scary as it does exciting. You need to decide what features you want, make sure your credit is in good shape, and save enough for a down payment before you can even begin to shop for a home.
The down payment in particular proves a sticking point for many buyers. Even though some loan programs require as little as 3 percent for first-time homebuyers, for a €200,000 house, that comes to at least €6,000, in addition to closing costs and any upgrades. This can be particularly difficult since, after some lean economic years, Americans are saving little of what they make. Still, with diligence and smart moves, you can save up for a down payment and buy a brand new house.
Create a Budget
Mathematically, saving money is simple: spend less money than you earn, and put the remainder into a savings vehicle. Before you can do this, though, you need to find out what the numbers are. For at least one month, track everything you make and everything you spend. Identify areas in which you can spend less: eating out, entertainment, and the like.
The idea isn’t to stop having fun, but to separate what you need from what you want, and make decisions on which wants are more important. Once you go through this process, you can decide what you ought to be spending. If you are starting with no savings and need to reach €6,000 in twelve months, that means you need to put €500 in savings every month. This gives you your savings goal.
Little Things and Big Things
After you develop your goal, start working toward it. To begin, look at the difference between income and outgoing expenses. If the current difference won’t get you to your goal, make choices to get the newly built house you want. Find places you can cut down, and document the new savings each month. If you can see your progress, you are more likely to stick with it.
In addition to the savings as you go, make a commitment to save any unusual gains: a bonus at work, a tax refund, a gift, or any other extra money that comes in. Also, any extra money you can make through work, higher savings interest, or a side job should go toward your goal.
Check Your Credit
Approximately twenty percent of all credit reports have errors in them. This matters in two very important ways. First, lower credit scores make obtaining credit more expensive. To qualify for the best interest rates (and therefore lower payments), you need to make sure no erroneous, duplicative, or out of date information is in your reports. Simply eliminating these mistakes can give a big boost to your prospects.
In addition to the savings on housing payments, improving your credit score can help you get lower rates on credit you already own. Shaving fifty dollars off of your car payment, for example, means an extra fifty dollars you can save each month.
Saving up to buy a newly built house can be a scary proposition, especially in the abstract. By boiling it down to the numbers, though, you can get a clearer picture of what you need to do, and a cleaner path to get the house you really want.