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We all know the classic scene in The Wizard of Oz when Dorothy clicks her heels together and says, “There’s no place like home.” Suddenly, she’s home sweet home again, and everyone lives happily ever after.
If only buying a home were that simple!
So ruby slippers aren’t an option for you. No problem! With a steady eye on your goal—and these seven steps—you can make your home ownership dreams come true.
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Attack Your Debt Snowball
First things first: You’ve got to get out of debt. So cut up your credit cards and kick Sallie Mae to the curb! Use the debt snowball method to build serious momentum, starting with your smallest debts and working your way up to the largest. The more income you free up now, the more you can put toward your home later!
Build Your Emergency Fund
You know the old saying: If something bad can happen, it will. And when it does, having three to six months of expenses stored up for emergencies will keep you from dipping into your new home fund. Plus, it makes it easy to keep your head above water when the roof leaks or the water heater goes out.
Determine Your Goal
Now it’s time to put your dream to paper. Make a list of the neighborhoods you like and the features you want in a home then work with an experienced real estate agent to set a realistic budget. If you’re getting a mortgage, aim for a payment of no more than 25% of your monthly take-home pay on a 15-year fixed-rate mortgage. Plan to save a down payment of at least 10–20%.
By now, you’ve proven you have what it takes to be gazelle intense. You’ve worked as hard as you can to outrun debt on your way to a life without payments. Maybe you carpool, clip coupons, buy consignment, or all of the above. Keep the momentum up by keeping your expenses down and take the money you save to the bank. Every penny puts you closer to purchasing a place of your own!
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If you really want to add fuel to your home-buying fire, find opportunities to make more money and work it into your savings plan. Get a second job. Have a garage sale. Do freelance work. Heck, sell your old comics on eBay—whatever gets you farther down the path to home ownership!
Pause Retirement Savings
It’s okay to stop investing to pile up cash for your down payment if it will help you reach your home-buying goal faster. Just don’t put retirement off longer than a couple of years while you save up for a home.
Have a Strong Support System
The finish line never feels out of reach when you have friends to cheer you on along the way. So surround yourself with people who will help you stay motivated, and partner with a real estate agent you can trust to guide you to the right home at the right price.