First American Planning

Buying For Your First Home? Tips For Saving

Purchasing a home is one of the great milestones of American life. The following suggestions can help everyone, from those looking to buy their first house to others who are looking to expand their assets, save more efficiently.

• Save More Than You Need: Financial planning experts agree that homeowners should accumulate a portion of their intended down payment before applying for a home loan.  With a reliable source of income, customers can likely apply for a housing loan with 10% of the sale price in hand. However, putting additional funds away can improve your house buying experience substantially. Saving a sum equivalent to more than 20% of a home’s value will allow you to qualify for a low-interest mortgage. Paying more upfront will also protect your finances if a dipping house market forces you to sell at a loss. Consider saving an extra $4000-$6000 dollars to take care of closing costs and fees. This foresight can lead to even bigger savings over the next few years.
• Make Realistic Goals: Meeting short-term objectives can help motivate consistent saving. Establish waypoints each 10% to 15% of the goal amount. As you reach these milestones, set higher bars and challenge yourself to practice frugal habits. Use a budget to organize spending. Include saving goals and follow your plan to guarantee success each month.
• Scan For Extra Help: According to the National Association of Realtors, over 20% of home down payments are funded by loved ones as a gift. Don’t overlook any possible resources for home-loan assistance. There are federal and state government programs available for first time homeowners to obtain low interest mortgages. Ask your employer about 401(k) borrowing options. You may be able to temporary divert retirement funds toward the cost of a new house.

Good spending habits and responsible use of credit cards will build the credit you need to obtain an affordable mortgage. Those looking to purchase a home in the next two years should consider methods to improve their credit score in order to qualify for the best possible rates.