Saving up to buy a house can seem overwhelming but with a few simple steps you’ll be on your way to the closing table in no time! Very few people have the means to immediately pay off their home in full and therefore must apply for a mortgage. A down payment is the percentage you can afford to pay upfront for your home at the time of the purchase.
There are several options to mortgage financing. Conventional no MI (mortgage insurance) requires 80% LTV (loan to value) and a down payment of 20%. For borrowers with less cash on hand other great programs are available to fulfill your home buying goals. The Conventional loan offers up to 97% loan to value. FHA (Federal Housing Authority) offers homebuyers a 3.5% down payment requirement and more flexible lending requirements. The VA loan offers Active duty, Veterans and National Guard with up to 100% financing. VHDA (Virginia Housing Development Authority) offers homebuyers a down payment of up to 101.5%. All programs differ in eligibly and guidelines.
For example, if you’re buying a home for $300,000 and your mortgage requires you to pay 20% of that your down payment would be $60,000. All programs differ in eligibly and guidelines. To find out more about your mortgage and down payment options contact Advance Financial Group today. For ways to save check out the steps below.
Determine What You Can Afford
Know before you go! Before you fall in love with a home it’s important to determine what loan program is right for you, and what monthly payment you’re comfortable budgeting. Getting pre-approved upfront will help make sure you start your search in the right direction. To get pre-approved today click here.
Establish a Monthly Budget
To ensure you have money saved establish a monthly budget. Start by creating a spreadsheet that shows your monthly gross income and your expenses for each month. Set time aside each month to review your budget and spending habits and determine where you can cut costs.
Here is a free budget spread sheet for you to use.
Cut Out Unnecessary Costs
After establishing your monthly budget you should have a good idea of what expenses can be cut. You will find a vast improvement in your monthly savings by simply cutting out unnecessary costs. According to the Washington Post cutting down on daily coffee runs, packing your own lunch and cooking more meals at home could help you save over $3,000 dollars annually.
Create Your House Fund
Create a separate savings account specifically for your down payment. Set an amount to automatically transfer from your paycheck into your house fund. You will be surprised at how fast your money adds up!
Tim Good is the Vice President Branch Manager and Senior Mortgage Banker with Advance Financial Group, a Division of Monarch Bank and Mortgage. NMLS #305913. He can be reached at tgood@monarchmortgage.com