Many people today want to own their home, but lack confidence that they can save enough money for such a large purchase. The reality is, with time and patience, most people can indeed save and achieve home ownership. One of the first priorities when getting ready to buy a home is to be pre-approved for a loan. Talk with a mortgage broker and determine exactly where you stand credit-wise. These folks are experts in their field and know how to guide you when it comes to the right credit score, how much borrowing power you have, and what your down payment and closing costs would total. They can also estimate interest rates, monthly payments, etc. Even if you’re looking to buy in the future, it’s never too early to get some numbers together and start preparing and saving. Next, set up a budget and save for those costs mentioned above. “My biggest advice I give to my clients in regard to saving for the home they want is to start pretending they have a house note immediately,” says Alana Mears, Vice President and Mortgage Executive at Iberia Bank.
“If they are preapproved for $1,000 monthly note, I suggest putting exactly that amount (or more if possible) into a savings account. It is important that they “feel” how this mortgage payment will affect their monthly budget.” Whether it takes you months or a year or two, all extra funds (raises, bonuses, tax refunds, monetary gifts received, money left over at the end of the month) should go into a special account labeled HOME. It is not uncommon to set aside several thousand dollars in a few years. Compare banks, credit unions, and online banks to see which kind of account will pay you the most interest on your savings. Watch for hidden fees and early withdrawal penalties. Do you have an IRA? Using funds from your IRA can mean taxes and penalties–unless it’s used to buy a home. IRS rules change, so ask if this is a possible option for you. While setting up that budget, add in ways to pay off existing debt. As one bill is eliminated, double up on other bills, or add that payment into your savings account.
Thrive Magazine for Better Living
Here are some other credits and/or special financing options you may qualify for:
First Time Home Buyer
Many finance companies give special rates and discounts for first time home owners.
Rural Development Financing Depending on where your dream home is located, the house may be eligible for special funding, which means better rates and sometimes even 100% financing for the buyer.
Are you an HGTV fan?
Consider purchasing a fixer-upper for far less than a ready-to-move-into home and save hundreds, perhaps thousands of dollars.
Foreclosures and Sheriff Sales
People have found incredible deals on homes by checking into these options. Some potential homebuyers begin the process with a firm plan but eventually get off track or lose enthusiasm. Don’t despair. Saving takes determination and dedication but owning your own home is indeed a possible dream.
Thrive's April 2018 Issue