Saving money to buy a home is challenging on the first attempt. If there’s never enough left at the end of most months to save, you’re not alone. Several first-time home buyer tips could help you save the money you’ll need to fulfill your dream of homeownership.
Understand the Down Payment Range
Down payment programs for first-time home buyers can range from 0 to 20%.
The amount of money that you’ll need will depend upon loan program guidelines, your credit rating and your financial situation.
If you are a veteran or a current servicemember, you may qualify for 100% financing, which would not require a down payment.
If you buy a home In certain rural neighborhoods, you might be eligible for a home loan through the United States Department of Agriculture that doesn’t require a down payment.
Many real estate advertisements reflect a 20% down payment to display a lower and a more affordable monthly payment.
In fairness, a down payment of 20% helps home buyers avoid mortgage insurance premiums. Additionally, you might secure a lower mortgage interest rate.
Popular FHA programs include a 3.5% down payment for eligible borrowers with a 580 credit score or greater and the FHA 100% financing program.
If your credit score is less than 580 points, you’ll be required to make a 10 percent down payment to obtain an FHA loan approval.
Several lenders offer a 1% down payment mortgage program for home buyers with favorable credit scores.
Having a low debt-to-income ratio or an above-average portion of debt that’s allocated against your monthly income could influence the amount of your down payment for a home.
Know Your Buying Power
Home prices fluctuate in Arizona and throughout the USA.
Knowing the price of your home shopping range provides insight that directly impacts the amount you’ll need to save.
Speaking with a licensed mortgage professional at ASJ Mortgage Solutions is an excellent way to learn about your home buying power and to inquire about a mortgage pre-approval.
Review Your Expenses
Finding several ways to trim some of your expenses could provide additional savings or reserves toward buying a home.
Temporarily suspending your gym membership, cable TV subscriptions and recurring payments for items that you rarely use could add up to a tidy sum.
Cooking at home more often instead of paying hefty restaurant costs and gratuities of 20% or greater might improve your bank account balance, too.
Automating your savings via payroll deductions toward a 401K, a money market account or a short-term certificate of deposit are prudent ways to seamlessly stash more of your cash.
Increasing your earnings via overtime hours, a second job or a side hustle are also some other ways to generate money to save for your new home.
Make a Savings Goal
You’ll need a target to hit your savings goal.
If you’re planning to buy a home with a sales price of $300,000, you will need approximately $10,500 for an FHA 3.5% down payment loan, plus additional funds for closing costs.
Working with an experienced loan officer could enable you to learn about paying down the most appropriate bills to improve your debt-to-income ratio and your financial assets.
Contact ASJ Mortgage Solutions to discuss your home buying opportunities.Questions? Contact ASJ Mortgage Solutions Today!