Saving for your retirement and a down payment for a house can feel like walking a fine line. It seems if we want to save for retirement and a down payment, we have to pause one to do the other. But here are a few simple steps to work towards both, shared by financial planner Cindy Scott from Charles Schwab.   

  • Contribute just enough to your 401K to get the full match from your employer while you are saving for your down payment. 

  • Then take the remainder that you can save and put it towards your down paymentOne important caveat – make sure you are also able to pay down your high interest rate debt as well putting some money towards an emergency fund if you don’t have one.  

  • Once you have that solid foundation, put any additional savings (above your employer match for your retirement) towards your down payment! After you are finished savings towards your goal of a down payment you can then direct that savings back monthly to your retirement.  

  • Remember – monthly housing costs should not be more than 30% of your income. You don’t want your budget so tight that you don’t have money to enjoy life, however most people need to tighten their belt to achieve the goal of home ownership, but it’s worth it!  

Investment tips –

  • A great way to make your home a great investment is to buy a home with 2+ bedrooms and then rent out the other rooms to friends. This also allows you to have someone else help you pay down the debt. It also allows you to buy a home that is more expensive but you can live in longer. The primary reason people move is because they need more or less space. If you have a home with more bedrooms, you can always take over the additional space as your income grows without needing to move. This will help you minimize moving and sales fees in the future. 

  • You don’t need to have a 20% down payment to buy a home. You can buy with as little as 3% down or 0% if you are a veteran. Sometimes you can’t save enough money to match the rising prices of the market so talk to your Realtor and mortgage lender about the best strategy to buy. Once you buy, you receive the benefit of appreciation on the whole home even though you are borrowing most of the cost of the home.  

  • Don’t miss the benefits of writing off your home office. That can save you some money on your taxes. 

At Pierson Real Estate we know it’s a tricky balance to take care of your family for the future but provide the house of your dreams today. Reach out and we can help you figure out what’s the right next step for you and help you get to your goal. Give us a call today 202-800-0800 to set up an online buyers consultation via zoom!