If buying a house is on your radar in the next few years, you need to start planning for it now. Home ownership is a much different world than the one of renting. There are new responsibilities to take on, such as your own snow removal and landscaping as well as home maintenance, paying all of the utilities and keeping a home insurance policy. There are also new costs to take on, such as purchasing and repairing your own appliances. The most important thing that you can do now is to save for your down payment and your closing costs. The more you can save now, the easier it is later on as you go through the home buying process by increasing the amount you have available for a down payment.
How to Save
Plan your budget. You need to know your monthly budget if you don’t already. Write everything down so you know how much you’re routinely spending on bills. Estimate a higher electricity bill for when you buy a house. Since the house will, most likely, be larger than your apartment, you spend more on heating and cooling.
Keep Track of Spending
Take some time and track your spending for a month or two. This gives you an idea of how much money you spend on things that aren’t necessities. This is a great way to figure out how to start saving money. Take the money that usually goes to these items, such as cable or dining out, and start saving it towards buying a house.
Find Out Pricing
Price check houses in areas in which you would like to live. If you have an idea of where you would like to buy a house, look at the houses currently on the market to get an idea of the price range. This is just so you get a rough idea as things could change a little bit by the time you’re ready to buy. Also, be careful with this and don’t fall in love with these houses if you’re not currently ready to buy. That can be really hard, but there will be more houses to consider once you have the financial resources to purchase a house.
How Much Do You Need to Put Down?
Know how much of a down payment you need. By having an idea of how much a house is going to cost you in the area you’re interested, you can have a plan for how much you need to save for a down payment. With a conventional loan, many lenders look at a 20 percent down payment, but this is now at the high end. You can usually get loans for 3 to 5 percent down instead. It is in your best interest to have a higher down payment as this can dramatically drop how much to take out for a loan. Remember that you also cover closing costs.
Use Online Tools
Use online tools to help plan your future. Online mortgage calculators, available through several banks, help you plan out monthly expenses. Budgeting tools also help you see where you can cut costs and save money. Several blogs from realtors and real estate companies help you find the hidden costs of home ownership so you know what to expect. Also, consider reading articles on how to improve your credit score ahead of applying for a mortgage.
Consider the Timeline
Play with the timeline. After you know how much you’re looking to save, you can adjust your timeline to see how long it will take you to save this money. You may be able to purchase sooner depending on the terms of the loan and how quickly you can save the necessary money.
Open a Savings Account
Open a savings account just for the purpose of buying a house. By separating this money, you’ll be less likely to pull from it. Make sure that the amount you’re saving is something that you can afford to do. You don’t want to go dipping into this account because it’ll just take that much longer to buy a house.
Available Programs That Can Help
A real estate agent and mortgage professional can help you make the most of your money by finding a good Bandon home and considering certain programs that can help cover the costs of buying a house.
Fannie and Freddie
Fannie Mae and Freddie Mac are both sponsored by the government and help drive the market, back 97 percent loan-to-value loans. This means that lenders can offer 3 percent down payments.
The Federal Housing Administration offers 3.5 percent down payment mortgages through certain lenders. These loans have lower rates and are easier to qualify for.
Veterans Administration loans are available for eligible veterans, active duty service members, and their families. These loans require no down payment and no mortgage insurance.
U.S. Department of Agriculture
U.S. Department of Agriculture offers home loans for homebuyers in suburban and rural areas. These loans have low rates and 100-percent financing.
With responsible planning, you can save for your down payment as well as closing costs and be on your way to homeownership. It’s important that you firm up your budget as well as keep in mind what new expenses you’re going to have once you get into the new house. Good luck with your planning and house hunting!