Whether you’re an experienced homeowner or looking to buy your very first home, the process can feel overwhelming. Throw the holidays into the mix and forget it, right? Wrong! Believe it or not, you can have it all. You can give presents that light up your loved ones faces, eat your yearly quota of pie in a single day, practice that special sort of holiday patience that comes from being around distant relatives for too long, and get a little closer to that next home all at the same time. These tips can help:
1. Set a Realistic Budget
You do not have to keep up with the Joneses, and the holidays are no time to forget it! Set a realistic gift budget. Talk with your family and loved ones about setting a limit on how much you will spend per gift for each other this year. If you’re already dealing with some debt, you know this is a no-brainer. But sticking to it can be a different story. Again, make these limits known to everyone well before gifts are exchanged so that you can hold each other accountable.
Now May Not be the Time for a Vacation
Traveling is expensive. Aunt Emily doesn’t have to host Thanksgiving every year. Plane tickets, gas, groceries, kids, entertainment, it all adds up. If traveling isn’t in your budget (see above), let your loved ones know this year. Maybe they come to you this year. You’re saving for your dream home, they’ll understand.
2. About Those Pesky Credit Cards
If you’re using your savings to finance your holidays this year, kudos. By far, this is the best method to make sure the holidays don’t derail your efforts at saving for a new home. If not, that’s ok too. But please, tread lightly.
It May be a Good Time to Cash in Those Rewards Points
Instead of putting more on cards, why not cash in those reward points? There are all sorts of reward programs, and countless reward credit goes unclaimed each year. What better time to use your points?!
Do You Know Which of Your Credit Cards Have the Lowest Interest Rates?
Well, do you? Find out, then do yourself a favor and use those cards! This makes it easier to pay back the balance without negatively affecting your overall score.
It’s the Most Wonderful Time of the Year… To Build Your Credit Score:
The Holidays are the perfect time to build up your credit score. Yes, you heard that right!
Did you know that your credit score is determined in part according to the amount of credit you spend vs. the amount of overall credit you have? To put it another way: if a main concern is overall credit score, it can sometimes make sense to open another credit card so that your overall credit expenditure and score stays the same or improves!
Research the stores this Holiday Season that are offering low interest or extended no interest periods. These are the perfect ways to buy presents for your loved ones this year while also building your credit score.
Use caution here, though, and never over-extend yourself if you’re not able to make timely payments. Also be sure to pick these stores wisely because you don’t want to have too many inquiries on your credit report. Find the credit cards that work for you, and be sensible on the amount you spend so you can pay it down in time for your new home purchase!
Alternative Down Payment Ideas
Your Retirement Savings Plan
The truth is it’s difficult to save for everything we know we should. Sometimes, we have to make choices about what we should be saving more for right now. Many retirement savings plans offer “penalty-free withdrawals” for “qualified expenses” or “lifetime events,” including a down payment on a home. Every plan varies, and it’s important to weigh costs and benefits. Some plans offer withdrawal in exchange for increased future contributions to make up for the loss in savings.
Down Payment Costs Vary by Home Loan Program
Did you know that the USDA offers a zero down payment home loan for rural homebuyers? How about that many counties offer Down Payment Assistance (DPA) programs to help borrowers with down payment funds?
Bottom line, get creative.
Don’t let anything stand in between you and your dream home. Not even the holidays.