Thursday August 10, 2017
Owning a home may be a great investment, but it takes money achieve home ownership. Securing a down payment can be a daunting endeavor. Fortunately, there are ways to get into the house you want at a price that fits into your budget.
A down payment is the initial cash payment made during the onset of the purchase of home before a loan is secured. A down payment for a home can typically run in the tens of thousands of dollars, and come with several stipulations for the bank to consider. With today's general financial climate banks must considers the borrower's income, credit history and score. This helps the bank determine borrower's possible ability to maintain mortgage payments, along with the other costs of owning and maintaining a home, such as property taxes, maintenance, and utilities before being approved for a loan.
Special Mortgage Programs
As described by bankrate.com, several government agencies offer grants or mortgages at below market rates for specific groups of individuals, such as veterans, first-time homebuyers, homebuyers in rural areas, and emergency responders. Some professional organizations may also have special deals for members. Most of these can reduce your mortgage payment and some will even help you with a down payment. Working with a lender who knows how to navigate the world of discount loans can be invaluable resource.
Accumulating a down payment for a home requires discipline, saving and planning of your finances. A great first step is to set up an account specifically for the down payment, and to use it for nothing else. You can have a certain amount deducted from your paycheck and direct-deposited into the account. If you receive a refund on your federal income taxes or any kind of unexpected windfall, at least part of it should go into the “house account.” If you earn money on the side, by freelancing, babysitting, repairing cars, or making and selling crafts, some or all of that should also go into the special account.
Savings accounts are useful, but they typically have low rates and do little to quickly grow the cash in the account. Certificates of deposit (or CD's) are only a little better by holding your money for a certain amount of time before you can cash out and see the return on your investment. An investment account with a brokerage is a good consideration, but is subject to some risk and potential loss. A portfolio of mutual funds is generally considered a great alternative way to quickly build the equity of your cash.
Whether you choose a savings account or an investment account, all the options have pros and cons, and possible taxes and fees associated with them. Talk to your investment advisor or local banking institution to learn the best investment option for your needs.
Look for ways to save money on groceries, transportation, communications, and entertainment. If you’ve been tracking your expenses, then you can move money into the house account when you see you’ve spent less in any given month, or when you find you’re spending less habitually. This can add up to a surprising amount fairly quickly.
Old loans can get in the way of your ability to save. If you have a car loan, look into refinancing it at a lower interest rate. If you have more than one credit card, consolidate the debt onto the account with the lowest interest rate, and get rid of the cards with the higher rates.
Compare Mortgage Interest Rates
When you’ve have enough savings for you down payment, don't settle for a mortgage from the first lender you talk to. Shop around. Depending on their loan program, and you financial fitness, rates can vary considerably from one lender to the next, and one lender may find you more credit-worthy than another. Do you comparison shopping, and don’t limit your comparison to the interest rate. Look also at points and closing costs to understand the full cost of the loan being offered.
Work With Us
Landmark 24's team of preferred lenders have many special loan financing programs and are glad to provide you with more information to help you get the best deal on a home in one of our communities in Savannah and Richmond Hill, Georgia, and Bluffton and Charleston, South Carolina. Contact us to learn more: 912-353-1275.