Do you have the financial ability to build your dream home? If not, let's take a look at some of the financial resolutions you can make this year.

save more and spend less

The easiest way to obtain financial independence is to live on less than what you earn. If you want to save money for a new home (or a new build), you'll need to save money for the downpayment. The general rule of thumb suggests you need 20% down for a construction loan, however, some lenders require as little as 5% down. Here are a few tips to help you save for that down payment:

• Look at your expenses and find places to save. Many people can find ways to spend less on entertainment - for example, drinks with friends, going out to eat, and other forms of entertainment can really dig into your wallet. Replacing a few of these outings with a home cooked dinner can save you hundreds every month! Just packing a lunch can cut your lunch costs from $12 per meal to $2 per meal. Other expenses include insurance (home, auto, health, etc.), subscriptions (TV, internet, cell phone, etc.), vehicles, and more. Take a look at the expenses in your life and ask yourself if they are truly worth the money you spend on them - or if you can find a way to save money by switching to another provider?
• What are you doing with your current savings?  The average interest rate on savings accounts is currently less than 0.1%. Did you know there are savings accounts and checking accounts that pay significantly higher interest rates? If you're saving for a downpayment that is more than a few years in the future, you could even consider CD's or investing your savings to earn a higher interest rate.
• How much equity do you have in your current home? Many lenders can use the equity you have in your current home to help you finance your new build. Increasing your equity, might just be the smartest move to make with your extra savings.  Paying an extra $100 per month could cut years off your current mortgage and save you thousands of dollars in interest.  

Improve your credit score

Increasing your credit score can help you qualify for a better interest rate and put you in a better financial situation to build your dream home. Let's take a look at how your credit score is calculated to determine the best way to improve it.

• Your payment history plays a significant part in determining your credit score. Be careful to always make payments on time (or early). These payments include credit cards, store cards, auto loans, student loans, mortgage loans, and more.
• Credit utilization: If you're constantly maxing out your credit card limit, this will negatively affect your credit score. Try utilizing 30 percent or less of your credit limit. For example if you have a $10,000 credit limit, try not to accrue a balance of more than $3,000 on your credit cards. If this isn't possible, you may want to consider applying for a 2nd credit card to increase your overall credit limit.
• The length of credit history: Keeping your accounts open for a longer period of time will improve your credit score (as long as you make payments on time and be thoughtful of your utilization).
• Other factors include credit mix (having different forms of credit) and new credit (avoid opening several new accounts in a short period of time - especially if you plan on building a new home in the near future).

There are 2 things you can do to improve your credit score right away: Utlilize 30% or less of your overall credit and start making full payments early.

Improve your income

Your total income plays a huge role in your financial situation. The steps towards earning a raise or promotion can vary from person to person so ask yourself or a mentor what steps you need to take to increase your income. Maybe you should start a side-hustle, maybe you should learn a skill or earn a degree, maybe you should make more sales calls, or maybe you should work harder and longer and dedicate yourself to being one of the most valuable employees in your organization. If earning a higher income is important to you, there is always something you can do to put yourself on the right path.

talk with a lender

Whether you're ready to build now or in a few years, it doesn't hurt to discuss your plans with a lender. A lender can look at your situation and help you determine what you'd need for a downpayment and what your monthly payments would look like. Prepping for the short and long term costs of building is a necessity. If you aren't sure which lender to talk to, we can recommend a few options that would be perfect for you.

give us a call

If building a home is something you want to accomplish, we can help you through every step of the way.  Whether you want to discuss your dream home and get an estimate on costs or you want to determine how much your current home is worth, Cypress Homes is here to help. We strive to offer great service before, during, and after the home-building process. Call us at 920-734-2324 or send us an email to start the conversation.