Mortgages

One of the most significant challenges that many people face when preparing to buy a first home relates to saving money for a down payment. While there are many different loan programs with varying down payment requirements, the fact is that it can still be difficult to save up a large sum of money. Some programs may require you to save as much as 10 percent or 20 percent of the sales price of the home.

You can employ a few different tips and techniques to save money for a down payment more quickly, and these are some of the options that others have successfully used to save money for their home purchase.

Make Saving Automatic

One idea that works well for many people is to make saving for your new home automatic. This may be as simple as scheduling a regular draft or transfer from your checking account when your paycheck is deposited into your savings account. Some employers may even facilitate this process by contributing some of your funds into a savings account on your behalf. With this option, the money would go directly into your savings account without you having a chance to spend it.

Take Advantage of Retirement Accounts

If your employer provides you with the option of investing in an employer-sponsored retirement account, you should take advantage of this option. Many will offer a dollar-for-dollar matching program, and this may essentially double the amount of money that is saved in the account.

More than that, the funds from many retirement accounts may be withdrawn without penalty if they are used for a first-time home purchase. There are some rules and regulations regarding this, so you should research this option more thoroughly.

These are among the two best options for saving money for a down payment for your first home purchase. There are other ideas that you can consider as well. For example, you may borrow from a whole life insurance policy, obtain a gift from a family member or even sell some of your personal belongings that you no longer need or use.

When you combine many of these ideas together, you may be surprised how quickly your down payment fund can grow. You can also speak with a mortgage professional to learn more about the actual amount of money that you may need for the down payment and closing costs.

A monthly mortgage can seem like enough of a financial responsibility on its own, but there are many factors involved in home ownership that affect its fiscal feasibility. If you’re in the market for a house and are wondering how your income will stack up against the rest of your expenses, here’s how to determine a home cost that’s reasonable for you.

Determine Your Down Payment

Before you start with anything else, you’ll want to determine the amount of money you can put down so you can estimate your monthly payments. The traditional amount for a down payment is 20% of the home’s purchase price, so if you don’t have anything close to this amount it might be worth waiting a little longer so you can minimize your payments and the amount of interest or mortgage insurance you’ll be paying in the long run. Each person’s situation is different, and there may be programs available with less than 20% down. This is an excellent question to pose to your trusted mortgage advisor.

Calculate Your Monthly Budget

If your mortgage cost already seems high, it will definitely be worth carefully calculating your monthly expenditures. Instead of a wild guess, take the time to sit down and calculate what your costs are including food, utilities, transportation and any other monthly necessities. Once you do this, it’s also very important to add any debt repayments you’re making to the mix. The total amount of your estimated mortgage costs, debt payments and living expenses should give you a pretty good sense of if your mortgage is viable in the long term.

Don’t Forget About The Extras

When it comes to purchasing a home, many people envision that they will be eating and sleeping their new home so don’t pay attention to all of the additional costs that can arise with living life. A new home is certainly an exciting, worthwhile financial venture, but ensure you’re realistic about what it entails. If you’re planning to go back to school or have children in the future, you’ll want to add a little bit of extra cushion in your budget so that you don’t have to put your other dreams on hold for the sake of your ideal home.

It can be very exciting to find a home you feel good about, but it’s important before making an offer to realize the amount of house you can afford so you don’t find yourself in a hole down the road. If you’re currently on the market for a new home, contact your trusted mortgage professional for a personal consultation.