Tips for Saving for a Home
Posted On July 23, 2020
You feel it’s time you stopped renting apartments and bought your own home. While you started talking with financial advisors Desert Hot Springs CA, there is still much you can do to save up for a healthy down payment and closing costs. Bear these suggestions in mind.
Look Into Government Loans
Depending on your financial health, you may qualify for a government loan. Look into loans from the Federal Housing Administration or the U.S. Department of Veterans Affairs. These loans come with requirements, such as having a specific credit score and debt-to-income ratio, but they can be of great help in making you a homeowner.
Check Home Prices
Of course, you want to check home prices in the areas you’d like to live in. There are plenty of sites you can use to price properties and decide how much you need to save. When checking prices, be sure you differentiate “must-haves” in a home and neighborhood and “would-like-to-haves“. Keeping what’s most important at the forefront of your mind helps narrow down your options.
Calculate How Much of a Down Payment You’d Like to Have
It’s a good idea to save up a down payment of at least 20%, but save up more if you can. One of the biggest reasons to save up at least 20% is so you don’t have to add private mortgage insurance payments to your loan, which usually runs anywhere between 0.3% to 1.2% of your mortgage’s principal balance. If you cannot save up at least 20%, factor the price of private mortgage insurance into your monthly mortgage payment.
Open a Savings Account
Open a savings account for your down payment and closing costs, preferably a high-yield savings account. Set up automatic regular transfers to this account to make it easier to remember to save.
Take your time and work smart when saving up for a home. Having a strategy helps you become a satisfied homeowner rather than a regretful homeowner.