A down payment is an important element of home buying. The larger your down payment, the less you will be financing, which saves you money in the long run. A larger down payment can also get you a higher value house or give you more equity out of the gate.
Saving for a down payment can be a challenge for many first-time borrowers. But we’re here to help.
Here’s the Mortgage 1 six-step plan for saving for a down payment.
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Some potential homebuyers believe they’ll never be able to buy a home because they can’t afford a 20% down payment. The truth is that many lenders no longer require 20% down. So how much do you need for a down payment? There are loans that let you purchase a home for a little as 3% down. You might want to speak with a loan officer from Mortgage 1 to determine how much you can afford and what you will need as a down payment based upon your circumstances. The will give you the end-target goal to save for.
What is your time frame for saving? The more time you have, the more achievable your goal will be. You might have to adjust your timing, too. If you had hoped to buy a house this spring but, after looking at your finances you realize that is not achievable, you might have to postpone your home buying plans a few months or even a year. But that’s OK. You want to be in the best position financially when you make a home purchase and the extra time will let you get there.
This is the most difficult part of the process for many people. There are many options for saving.
Money doesn’t grow on trees, of course. But there are ways to generate more income or money for your down payment goals. Options to consider include:
One you’ve determined how much money you will need, when you need it, and where it will come from, put together a budget outlining everything — how much is coming in each month and how much is going out, as well as where it is going. Putting everything down on paper will make you more cognizant of your spending. It will also give a reward by documenting the progress you are making on your journey toward your goal.
The final step is to put your plan in action and stick with it. “Plan the work and work the plan,” as they say. Faster than you think, you will see your savings grow and your dream of having enough saved for a down payment become a reality!
Want the ultimate tip? Get preapproved for your mortgage now, before you start shopping. A lender can help you determine how much you’ll qualify for and how much you’ll need. Call us at 866-532-0550 or find a Mortgage 1 Loan Officer near you to get the process started.