Whether you’re a first-time homebuyer or you’re upgrading to a new space, buying a home is exciting. No matter what you have in mind, you want the best deal possible on your new home. While purchasing a house used to be the classic American Dream, fewer Americans are actually achieving this dream than ever before. In fact, homeownership is 8% lower amongst Millennials than Baby Boomers.
What’s the reason so many young people are skipping buying a home? While many are choosing to live in cities and avoid being tied down, others say buying a house is just too expensive today. While it’s true prices are rising in some places, buying a home is still the more affordable option in most parts of the country. There are many smart ways you can save money to afford a home.
1. Improve Your Credit Score
Once you know you want to buy a house, it’s time to get serious about your credit score. The higher your score, the more options you’ll have when it comes to your mortgage. Here are some ways to increase your credit quickly:
- Pay down credit card balances
- Stop applying for new loans or credit
- Review your credit report for errors
- Dispute any negative account information on your report
Taking these actions above will help improve lender fees and interest rates. While you can boost your score quickly if you take these steps seriously, it’s best to have a period of time to address your credit score fully.
2. Understand the Down Payment
The more you can put down on a home, the lower your mortgage rate. If possible, it’s best to aim for 10-20% down. If your payment falls under 20%, you’ll need to pay for private mortgage insurance (PMI) which is insurance for the loan itself. If you’re pursuing an FHA loan, you’ll need to purchase mortgage insurance no matter the amount you put as down payment.
Aside from the down payment, there are other expenses to consider like appraisal fees, inspection fees, and closing costs. You’ll want to include these in your overall calculations.
3. Decide How Much You Can Afford
Before you start saving, you need to determine just how much you can afford to put aside every month towards your home. You shouldn’t need to spend more than 25% of your monthly income on your mortgage. With this in mind, create a budget that works for you.
This can be simple math: divide your monthly take-home pay by 4. This number is the amount you’re able to contribute comfortably to your mortgage. Using this, you can create a price range for a home that works for you.
4. Get Serious About Saving
Saving for a home is the same as saving for anything else. You’ll need to put money aside and cut back on spending. It can take time to save up for a home, and it’s best not to rush into the process. First, create a down payment fund. This is where you’ll keep your home buying savings. You’ll want this to be a separate account from your personal spending.
Next, find ways to put extra money each month towards this payment. You might cut unnecessary spending like cable or eating out. Even small contributions will add up when it comes to saving money for your down payment.
5. Use a Real Estate Agent
Finally, when it’s time to start searching for a home, use a realtor. While more home buyers than ever are relying on the internet to find their new home, there are still a lot of benefits to buying through a realtor. An experienced real estate agent can save you both time and money. They’re skilled in negotiation and ensuring the process is as smooth as possible.
It’s easy to think you’re saving money by not using an agent, but that’s actually not the case. The buyer doesn’t pay the realtor’s commission, the seller does. This means you’re able to use the knowledge and expertise of an agent at no extra cost to you.
Buying Your Dream Home
You can afford the home of your dreams if you’re willing to put in the effort and save smartly. Buying a home is more affordable than ever, especially if you’re careful with budgeting. The key is to use all the resources at your disposal, whether that means using a real estate agent or talking with a financial advisor. Your dream home is closer than you think.
In a perfect world, your mortgage would always be paid on time. Unfortunately, things happen. Sometimes we find ourselves in unexpected situations that leave you facing a home repossession or foreclosure. Last year in the U.S., the home foreclosure rate was 0.51% which is the lowest the rate had been in years. While the number of people that receive foreclosure notices is much higher, many are able to stop these proceedings in their tracks.
The first thing to remember if you find yourself with this scary reality is that you have options. Remember, your bank doesn’t want to repossess your home. They want this issue resolved, and that means they’re likely willing to work with you to find a solution.
If your home is in danger of being repossessed or foreclosed, don’t delay. The earlier you begin taking action, the more options you’ll have to avoid losing your home. Is your home in jeopardy? If so, follow these steps to learn how to avoid an extreme outcome.
1. Contact Your Mortgage Lender
This step is easily the most intimidating. If you’re finding yourself in a position where your home is at risk of repossession, odds are you’ve been avoiding the calls and letters for a while now. It’s scary to face problems like debt head-on, but remind yourself that your bank wants to work with you.
Think about it this way: the bank wants to get paid. Repossessing a home is a hassle, and they’d much rather come to a solution that works for both parties. Your first step should be to contact your lender as soon as you realize you’re struggling. If you find yourself falling behind on payments, it’s time to call. Lenders have options to help borrowers through these difficult times, and they might be able to find a repayment plan that works for you.
2. Foreclosure Alternatives
To prevent a foreclosure which wreaks havoc on your credit, look into alternatives approved by your lender. From government programs to a short sale, you don’t have to accept your home repossession at face value. Here are a few options that might work in your situation:
- Making Home Affordable – This federal program offers both an option for a loan modification and for refinancing through your lender.
- Principal Reduction Alternative – If your home is now worth less than when you purchased, you may qualify for this federal program. It’s designed to help homeowners reduce the amount they owe on their home.
- Short Sale – A short sale is when the lender allows the homeowner to sell their home for less than the amount owed on the mortgage. This is an effective way to avoid foreclosure. In most cases, the lender will turn the home around and sell it through an auction after the foreclosure process anyway, so they’re amenable to this solution.
For all of these options above, you’ll want to speak to your lender. They will review your unique options and how to proceed if you wish to continue with a federal assistance program or a short sale.
Bankruptcy might seem extreme, but it halts a foreclosure dead in its tracks. When you file a bankruptcy petition, you are free from debt collectors including your mortgage lenders. As soon as your lender is aware you’ve filed for bankruptcy, the repossession process is frozen.
While this doesn’t let you off the hook for your debts, including your mortgage, it allows you more time to recover your finances. Under the law, your mortgage lender and any other creditors need to work with you in good faith to create a payment plan that works for your situation. Before filing for bankruptcy, speak with an experienced attorney to learn how the process would apply to your situation.
If you find yourself facing a home repossession or foreclosure, don’t panic. The majority of homes that receive this notice don’t actually get foreclosed upon. The best way to avoid this extreme outcome is to work with your mortgage lender as soon as you find yourself struggling financially. From there, you’ll want to look into assistance options. Ultimately, you need to stay persistent. Don’t take a foreclosure notice as a death sentence. You still have options until the case is officially closed.
When selling a home, you generally want to sell it in the shortest amount of time for the largest amount possible. This can be a very stressful and anxiety-inducing process that is only made worse when attempting to sell a vacant home. If you find yourself in this situation, here are a few tips to help you learn how to sell a vacant home quickly and for a fair price. (more…)
It’s no secret that today’s home buying market is competitive. The median home price in the United States is up to $280,000, and this can be even more expensive depending on your state. Because owning a home is such a key part of the American Dream, it’s no wonder Americans are stretching the limits of their finances to qualify for a mortgage. (more…)
If you are thinking about moving to another city or even a new state, there are many things to consider. Maybe you were just offered a new job at a new city, or you are just looking to move to another environment that is more vibrant for a new pace. Whichever the reason is, moving can be quite stressful and there are some very important things to think about before packing your things and leaving. Although there are new activities, new restaurants, new parks, and more to keep you excited for your new venture there isstill some things you should be cautious of before leaving. We’ve written some newthings that you may need to know about your new hometown or even state that you will be living in below:
Do Your Research Before Buying or Renting a Home
The environment where your home is makes your living situation all that much more expensive or cheap. Due to this, make sure you do your research on the city and home you are moving to before committing. One great tip to do this is to check Google Maps, GPS, or any other location apps before moving and the crime rates in that area or city. Also think hard and long about the negatives and positives of that new city or new home.
If you have children and they are going to a nearby school, you may want to look at homes that are much closer so you won’t have to drive so far. Another thing to consideris, think about the grocery stores, department stores or even places you like to shop, are they nearby as well? Think about the ones that you can live without or not for you and your family.
Research the Local Shops and Events
The local events and shops will also help you with your final decision. As I said above, this will help you with big attractions or even new places to shop for everyday things that will influence you. If there is a new coffee shop or grocery store, that will impact your drive and what you are spending on products and gas. This will impact your cost and the products that you are searching for.
Research the Costs of Your New City
This is a crucial one! The big cities and towns come at a larger price. Make sure you know your costs and what you will spending before you make your final decision. It is always smart to calculate your expenses before you move to your new city or town. Planning your financial needs and costs is imperative and will help you when you experience a random occurrence where you may need to dig into your savings.