How To Start Saving If You Want to Buy a Home In The Next 5 Years
It’s a marathon, not a race.
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By Maridel Reyes
With record-low interest rates, many would-be buyers are leaping at the opportunity to purchase their first home — even during a pandemic. But before you fall down the Zillow rabbit hole, you’ll want to make sure that you have firm financial footing and prioritize paying off high-interest rate debt like credit card debt and personal loans, Sallie Krawcheck, founder of Ellevest, tells Bustle.
“Credit card debt can charge interest as high as 15% or 25%, which really saps your wealth and ability to save money,” Krawcheck says. You don’t have to pay off your student loans before buying a house, but it’s best to try to get them to a rate of 5%. And continue to contribute to your 401(k) at work.
According to the National Association of Realtors (NAR), single women accounted for 18% of home purchases in 2019, compared to single men’s nine percent. (Married couples make up the largest group at 63%.) But women give up much more to reach their goal: 46% report making financial sacrifices to afford a home, like cutting back on entertainment and clothing, according to data from the NAR.
If you have your sights set on owning property in a specific city or neighborhood in the next five years, here's how money experts say you can start working towards that goal today.