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5 Steps to Saving a Down Payment

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If owning your home is important to you, here are 5 things you can do to start saving for your down payment today!

Published in: Real Estate
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5 Steps to Saving a Down Payment

  1. 1. Saving for a Down Payment
  2. 2. Is it time to buy? • Inventory in Union County is high, which often results in lower prices. • Interest rates are low but rising slowly.
  3. 3. But do you have the down payment saved? • If you’re eligible for a VA (Veterans Administration) loan, you don’t need any down payment. • FHA mortgages require a down payment that is 3.5% of the purchase price. • Conventional mortgages require a down payment of 5-20% of the purchase price.
  4. 4. How much money do you need? To buy a $300,000 home, you’ll need: • $0 if you are eligible for a VA loan • $10,500 if you will use an FHA loan • $15,000-$60,000 if you will use a Conventional loan * A big down payment will reduce your loan amount and therefore reduce your monthly payments.
  5. 5. Will you qualify? • Your credit score will determine what kind of mortgage you will qualify for. • The first thing you should do is contact a real estate professional and a mortgage representative and learn your options!
  6. 6. How do you save money? 1. Set a deadline. Setting a deadline can be a powerful motivator to accomplishing great goals, and buying a home is a pretty big goal! So pick a date - one year from today, three years from today, maybe on your 30th birthday. Once you know where you are, it will make setting a timeline easier.
  7. 7. How do you save money? 2. Pay off Debt - If you have any outstanding debt then your first step is to pay down or pay off as much as you can. Not only will this repair your credit score, but it will also let you save even more money for your down payment. Take the highest interest rate one first, get it paid off, and then get to work on the next one.
  8. 8. How do you save money? 3. Create a “Down Payment” account - By opening a savings account just for your future home purchase, you help lessen the likelihood of tapping into that money for other things. Check with your bank or even local credit unions to see if they offer any special interest rates or programs for first time home owners looking to buy.
  9. 9. How do you save money? 4. Automate your savings - Pay Yourself First. Once you’ve figured out how much you can sock away every month, have that amount automatically withdrawn from your account and put into savings before you even see your paycheck!
  10. 10. How do you save money? 5. Ask about IRAs - Check to see if your IRA has any first time home buyer credits. Some will allow you to invest a considerable amount of pre-tax dollars and withdraw without penalty for home purchases and they often provide more return on your investment than a traditional savings account. Check with your IRA provider or financial advisor first.
  11. 11. Everything worth having is worth working for! Saving for a home of your own can be challenging, but it can be exciting too. The feeling of reward and accomplishment is extraordinary. Start with these steps and very soon you too can enjoy the long term benefits of setting down roots and investing in your future.
  12. 12. For more information, contact us!

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