September 29th, 2019 9:02 AM by Jackie A. Graves, President
A first home is a special milestone.
This is a chance to leap into the first steps into full fledged adulthood. One
of the most important aspects of buying a new home is finding the funds for a
down payment. Most lenders require the prospective applicant to demonstrate
they have saved a certain amount of money in order to qualify for a home loan.
Fortunately, there are many ways to save that sum.
Many potential first time home buyers do not know how much they
need to save in order to pay for a home. Now is the time to find out. In
general, mortgage lenders expect all buyers to have at least ten percent in
savings. A good mortgage will typically account for
no more than a third of the buyer's take home income. It's also important to
keep in mind that lenders also do not want to see that you're carrying much
debt. Now is the time to think about how to accomplish other goals such as
paying off any credit card debt and student loans.
Buying a first home can take time. It's good to start the
process of thinking about it right now. Set up a short time and long term time
frame. The short term should include thinking about your present housing
situation and where it may fall short. Over the long term, it should include
looking at potential neighborhoods in person. Stroll areas that appeal to you
directly. Go to open houses and see what's on offer. Open houses let you see
houses directly and examine them from attic to basement in great detail. Know
where you want to be six months from now, a year from now and five years out.
Now is the time to create a streamlined budget. You can still
travel now and then, however, it's also important to pay close attention to all
the little details that will add up over time. Avoid spending money you don't
need. Make coffee at home rather than buying it on the way to work. Buying
items like toilet paper in bulk can save money. The same is true of other
changes. Put off buying that second car. Continue using your current model.
Think about using public transportation to get to work or take a walk there and
save on the fares.
If there's an unexpected windfall, it's best to bank it rather
than spend it. If you file for the Earned Income Tax Credit, take the money
that's being deposited in your account and keep it right there. The same is
true of any and all raises as well as an inheritance, a bonus check or any
other funds that are not needed right now. Designate them as part of your home
down payment plan by putting them into a separate account designed solely for
While working hard and saving money for a down payment are good,
keep in mind that life may have other plans. You may face other bills such as
car payments, health issues or a sudden layoff. It's crucial to have an emergency fund on hand that you've
built up in advance. This will make sure you can meet such expenses with ease.
Any sudden financial issue should also not push you away from your ultimate
goal. Your goal is to keep saving up enough money for the kind of first home
you'd like to live in going forward.
Taking the long view is crucial. Saving up enough money for a
first home can take lots of time. You should never lose sight of what you'll
get in turn. You'll have a first home where you can set down roots and enjoy
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