Down Payments

Are you thinking about buying a new home? If you are going to take out mortgage financing, one consideration you will have is your down payment, which is the amount you pay up front in cash to cover some of the purchase cost. Let’s consider a few points that will help you to decide how much is the right amount for your down payment.

How Much Do You Have?

The most obvious question you will need to answer is: how much do I realistically have to place as a down payment? Keep in mind that your down payment is money that you aren’t going to see again until you sell your home. While you want to invest a significant amount for reasons we will share below, you still need to maintain a cash cushion of a year’s salary or so in case you fall ill or lose your job.

More Down, Less Monthly

The main case for putting as much as you can into your down payment is that the more you invest, the less you have to borrow. This means that over time, you will pay less interest and you will also have lower monthly payments. Keep in mind that with today’s low interest rates it’s a bit less of a burden to carry a large mortgage. However, these rates may swing upwards over the years, which will increase your costs.

The Need For Private Mortgage Insurance

If you’re going to put less than 20 percent down on your home, you’re almost certainly going to be required to purchase mortgage insurance. There are numerous options available to you, including those offered by the Federal Housing Administration or FHA. Your mortgage lender will share this and other private insurance policies that will protect you.

Don’t Forget About Lost Opportunity Cost

Finally, don’t forget to factor in the lost opportunity cost that comes with investing a large down payment. Unless you have a terrible money manager, your mortgage interest rate is likely to be less than you would be able to make investing the difference in your financial portfolio. If you’re thinking about putting an extra $50,000 in your down payment, consider that you might be able to make 5 to 10 percent on that over the next decade. There are no guarantees in investing, so speak with a professional for further guidance.

It’s not easy to choose the perfect amount for your down payment. If you have further questions or would like to know more about your mortgage options, contact us today. We’re happy to share our experience to help you choose the best mortgage for your new home.

Are you ready for home ownership? The prospect of owning your own house or apartment is an exciting one, but with any financial transaction this large there are some things to consider. The first is your down payment – that is, the initial payment you’ll put against the cost of the house to reduce the amount that you’re borrowing in a mortgage. Let’s have a look at four habits that will help you to get your down payment saved up faster.

Build (And Stick To!) A Reasonable Budget

The first and most obvious tip is to stick to a reasonable budget. Determine how much you have coming in and going out of your bank accounts and credit cards each month. Group everything into areas like ‘food,’ ‘utilities,’ ‘dining out,’ ‘entertainment’ and more. Then, reduce each area to a reasonable amount and avoid any overspending.

Figure Out Your ‘Latte Factor’ And Eliminate It

If you’re unfamiliar with the term, a ‘latte factor’ is that one consistent purchase that you make each day which, over time, drains your bank account. For example, if you spend $5 each day on your coffee habit that adds up to almost $2,000 per year in unnecessary costs. Pay close attention to your spending habits and try to eliminate anything that you can.

Make Automatic Payments To A Down Payment Fund

If you’re working a stable job and have regular pay periods, you may want to explore setting up a separate savings account for your down payment. Once you have this account opened, set up automatic deposits from your regular bank account after each pay day. This limits your ability to spend your cash while building up your down payment fund automatically.

Don’t Carry Credit That You Don’t Need

Finally, try not to carry credit that you aren’t going to use. This includes department store credit cards, extra bank credit cards or lines of credit. While it won’t necessarily harm your credit score to have available credit, if you do have it you’re far more likely to use it than if you don’t. You’ll need to be disciplined to save up your down payment. So don’t bother with extra credit that may be too tempting to resist using.

These are just a few of the smart money habits that will help you get your mortgage down payment saved up as quickly as possible. When you’re ready to discuss mortgage financing for your new home, contact our your trusted mortgage professional.

In these days of low interest rates, it can be a great idea to get into the real estate market and invest in a home. However, if you don’t have the funds saved up to buy a home outright, it may seem like more of a burden than it’s worth. The good news is that you might qualify for a mortgage loan, which tends to come with more favorable terms than a traditional bank loan. Here are three reasons why a mortgage might just be the best money you ever borrow.

Taking Advantage Of Low Interest

Interest rates have been relatively low for a number of years, which can be a definite financial boon when it comes to your monthly mortgage payment. Unfortunately, though, the predictions forecast that rates are on the rise and that means home ownership may be a more difficult dream in the coming years. If you’re interested in getting a home at a lower price with a better interest rate, it may be worth getting a short-term loan for the long-term gain.

Begin To Invest

It will certainly improve your financial outlook if you have a financial plan and a monthly budget you stick to, but few things will help your money grow like investing. Fortunately, real estate is still one of the best investments you can make in terms of helping your money grow and ensuring your future fiscal success. While stocks and mutual funds can be a bit topsy-turvy if you’re not knowledgeable about investing, real estate can be a more reliable asset that’s easier to understand.

Giving Up On Rent

When investing in a home, there are few things more rewarding than not having to pay rent anymore. Instead of effectively tossing away money each month that you’ll never see again, you will be able to see your equity grow in the home and property you purchase. Plus, this equity can be used as leverage for investment in another home. It also means that no matter the downturn in the market, you’ll have a solid investment in something.

You may not like the idea of borrowing money for your mortgage, but it can be a good fiscal choice with interest rates on the rise and the opportunity to say goodbye to rent forever. If you’re currently considering borrowing and are planning on buying a home in the near future, contact your trusted mortgage professional for more information.

Are you considering buying a home for the first time? For some, it can seem nearly impossible to come up with the funds for the down payment. Fortunately, there are a few ways that you can save a little over time and not have to borrow from the “Bank of Mom and Dad”. If you’re looking to invest in a home in the short-term and are looking for solutions to save up, here are some tips on how to get to your down payment amount more quickly.

Create A Budget

Most people don’t like the idea of a budget, but few things are going to help you reach your financial goals like having one. Instead of sticking your head in the sand, add the numbers up and see approximately how much you’re spending each month. It may not seem like it, but getting a sense of what your monthly costs are can help you get a good idea of your overall financial picture and how much you really should be spending.

Get An Extra Job

Whether you want to do a freelance job on the side or get some part-time work, there are few things that are going to help you achieve your goal of home ownership like a little extra money. It may seem like a drag to go to a part-time gig from your full-time job, but it can be well worth it when you begin to see your bank account fill up. It’s just important that your part-time gig pays enough that it’s going to make up for the extra time you’ll be giving up.

Trim The Excess Costs

Now that you’ve got some extra money coming in and you’ve crafted a budget, you’re certainly on the right track. However, indulging in life’s little luxuries can eat away at your savings. While you’ll want to keep a little aside for meals out or entertainment, if you have other sizeable costs you’ll want to eliminate these in order to save for your greater goal.

It can take some time to save up for a down payment, but you may be able to avoid borrowing money if you bring in more each month and get rid of excess costs. For more information, contact your trusted mortgage professional and we’ll be happy to help.

A mortgage is one of the most expensive purchases you’ll make in your life, and for many, the idea of being indebted to it for years can seem like quite a burden. However, while you won’t necessarily be able to pay off your home with instant savings, there are ways that you can pay it down more quickly. If you’re wondering how to drum up some extra money for your mortgage, you may want to consider the following options.

Refinance Your Mortgage

One of the best ways to get a hold of extra funds is by lowering the amount you owe, and refinancing can be a way to do this. Since the interest rate on your mortgage adds up to additional money spent over time, getting a lower rate can easily minimize your monthly mortgage payment. It’s just important to be aware of all the costs associated with refinancing beforehand so that you can be sure the choice will result in money saved and an improved financial outlook.

Review Your Budget

Budget may be a dirty word for many people, but when it comes to scrimping for your home, it may be one of the best weapons you have in paying down your mortgage. Instead of looking elsewhere, sit down and review your budget to ensure your expenditures aren’t out of line with your income. It may seem too good to be true but, in all likelihood, you’ll be able to find a few places you can cut back for a little extra money each month.

Get A Second Job

It may not be the best option if you’re already working hard at your day job, but getting a job on the side can end up being a great way to find extra cash without limiting your lifestyle. Whether you decide to work in a restaurant or pick up a freelance gig on the side, there are plenty of options that may quickly add up to a more-rapidly reduced principal. You may even want to find something you already enjoy so it feels less like work.

The idea of paying down your home more quickly may seem out of reach, but by re-considering your budget and considering other employment, you may be able to hustle up some additional funds for your investment. If you’re preparing for home ownership and are considering your mortgage options, contact one of our mortgage professionals for more information.