Investing in a mortgage is a big step. It’s one of the biggest financial steps an individual will take in their lifetime. So it’s important to weigh it carefully. Don’t be discouraged by the size of the choice – instead be encouraged by the variety of resources you can tap into.
Down payments will vary among lenders and in amount, depending on the loan program, type of loan, home price, credit score and budget. Below we’ve crafted some questions that will help you evaluate and analyze your ability to save for a down payment.
- Is now the time for me to purchase a home? In a society that favors the word “now” over the word “later,” this question may seem silly. But it’s not. Purchasing a home means saving consistently, making payments, paying additional bills, maintenance responsibilities, and more. Check out listings near you and see what’s out there. If you aren’t in a place where you can save or you haven’t been saving. It may be time to wait. Be honest with where you’re at.
2. What down payment can I afford? The possibility of purchasing a home is exciting. However, often our eyes are bigger than our wallets. It’s important to be practical. Consider how much you can pay out of pocket for a home. That may mean going with a cheaper home or being stricter with your spending.
3. What monthly payment does my income allow? Simple. How much do you or your household make in a month? What will your house payment do to that number? If it doesn’t cover the cost now – it won’t later. Consider picking up odd jobs or making a bigger down payment, or trying the next question.
4. What changes in spending do I need to make? Everyone needs to evaluate their spending before purchasing a home. Sometimes we need to prioritize the way we spend money. Leisure spending may not always be an option. If purchasing a home is a goal, consider how you can cut spending or alter your habits.
5. What method will I use to save money? Automatic saving accounts are the most widely recommended method of saving. Usually free, they can be drafted from your pay without effort from you. Banks sometimes have programs for first time buyers or you could invest. You could even try putting a dollar or change in a jar or bucket every day and depositing it every so often.
6. Do I need to ask for lower rates? If you’ve tried everything above and you still need some wiggle room – evaluate you bills. Are you paying high interest rates on credit cards? Has your car insurance been the same for a while? Consider calling and asking for lower rates. This could put more money in your pocket.
Congratulations, you’re doing your research and preparing well! Are you ready to start saving or do you need to work on one of these questions?
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