Saving for a Home?

Question

My husband and I make a little over 63000 a year after taxes. Our expenses currently are 54,000 a year. We would like to plan our savings so that we can come out ahead with a nest egg of 3 months and a decent down payment on a house in two years. We live in Seattle and would like to buy a home within two years, but the housing costs keep going up. I had a bancruptcy discharged in 2005, my husband is still paying on a 13 through August of 08. We also have two kids 8 and 2 (the 8 year old has a GET account the two year old does not yet). Things I am trying to consider also are my son will be in school in 4 years so that will be less for daycare. Any advise for good ways to maximize our savings and get ahead are appreciated. I have been looking into an ING account as well.

rent, 1 car payment (second is paid for), two credit cards used for gas and emergencies, utilities, tithes, and entertainment money are all included in expenses.

Answer 1

There are a ton of different ways to save up for buying a home. Savings accounts, stocks, bonds, t-bills, etc. ING definitely has a competitve APY.

But aside from looking at money saving ideas, you should learn more about mortgage and the housing market. That's where you'll end up saving the most money. Down payment is one thing, but securing the lowest interest rate and the best sales price is the best way to save money.

Learn how your credit score affects your interest rate, and how to structure a deal to get the best blended rate. You may not need to put more than 5% down on a home.

Check out http://www.thetruthaboutmortgage.com to educate yourself.

Answer 2

Try to lower your expenses. Shop at Costco/Sam's Club/Winco instead of QFC/Safeway. Buy generic brands. Pay off any debt you may have as quickly as possible. And, with housing costs continuing to rise (I live in the Seattle area too), just hope that things start to level out soon. There are sites out there where you can pay about $30 and learn of houses that banks foreclosed on, auctions, etc. Just watch out for getting stuck with someone else's debt on top of your purchase price.

Answer 3

I'm presuming that your expenses include your current rent, is that correct?

The very first thing you have to do is cut your expenses so that you can increase your savings.

I'm going to recommend a program to you called "Financial Peace University." I recently went through it myself and have found that most of it is "common sense", but I needed to hear it, and the program gives you ways to make yourself accountable to both you and your spouse.

The idea behind it is to "live like no one else" now, so that you can "live like no one else" later. The author, Dave Ramsey, is very fond of saying, "A paid off mortgage replaces the BMW in the driveway as the status symbol of choice."

FPU is honestly one of the best educational experiences I've had in my life. I heartily recommend it. Check it out.

Answer 4

the best thing for you to do is to cut back your costs and wait until the bankruptcy is written off your credit records because it will be pretty hard for you to get a loan and if you do, you will have a very ugly interest rate. To do this, make sure you make timely payments and work on establishing credit.