4 Tips To Save For That Down Payment

In order to save up a huge amount of cash for the down payment on your first mortgage, you need a solid savings plan!

When you take out a mortgage on your new home as a first time homebuyer, the more you can pay as a down payment the better. The down payment on a mortgage reduces the principle of the loan and means that you will be paying tens of thousands less in interest payments over the life of the loan.

Most financial experts recommend that you should save up at least 20% of the value of the home as a down payment. Depending on the value of the home that you want to buy, this can be a serious chunk of money.

The conventional saving tricks of skipping your morning latte and eating dinner at home just aren’t going to cut it when saving up this much money! You will need some strategies for saving big.

Here are some tips to help you get closer to that down payment:

Make A Separate Savings Account

No matter how much you have already saved for your down payment, create a new savings account to put the money in. When the money is in your personal account it is so much more tempting to spend it on day to day expenses. Also, a savings account will give you a better rate of interest so that you can help you money grow.

Pay Off Your Credit Cards First

If you have credit card debt, you will be paying interest charges to the credit card company every month. These charges can really add up, especially if you are only paying the minimum on your loans. If you can pay down this debt you will have extra money every month to put into your savings instead.

Get A Part-Time Job

If you want to accelerate yourself towards having your down payment saved up, you could consider taking on a part-time job in addition to your full-time job on a few evenings and weekends.

It doesn’t have to be something that you do forever, but even sticking with it for six months to a year will give you thousands in extra income that you can put straight towards your down payment.

Make A Backwards Budget

Do you find that after you have paid all of your bills and your living expenses, there is nothing left over to save? Rather than calculating all of the money that you use on your monthly expenses and then saving whatever is left afterwards, why not make your budget the other way around?

Start off with how much you want to be able to save per month then subtract that amount from your net income. The number you have left is what you have to live off.

You will find that you naturally change your habits to make this amount of money work for you and if it if not enough you can increase your income by getting a side gig. These are just a few ways that you can save up for a down payment on your first home in order to save money over the years on your mortgage.

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ULTIMATE HOME BUYING TIPS

 home-buying-tips

1. Don’t buy if you can’t stay put.

If you are not sure if you will be in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell sooner than later.

2. Start by knowing your credit score.

Since you likely be getting a mortgage to buy a house, you should make sure your credit history is as clean as possible. A few months before you even start looking at homes, you should get a copy of your credit report.  There are several companies that can provide you with a FREE credit report.  Be sure to only use one company and only pull it once.  Having you credit pulled frequently can alter the numbers in a negative way.  Make sure the facts are correct, and fix any problems you discover.

3. Before house hunting, get pre-approved.

Getting pre-approved will allow you to better understand what your purchase power is.  You will save yourself the grief of looking at houses you can’t afford.  The difference between pre-qualification and pre-approval letters; pre-qualification is based on a quick review of your finances and pre-approval is based on your actual income, debt and credit history.  You want to put yourself in the best position to make a serious offer when you do find the right home. Get Pre-Qualified here

4. Get professional help.

Even though buyers have unlimited access to home listings on the internet, most new buyers (and many more experienced ones) are better off using a professional agent. You should find an agent who is reliable, experienced and trustworthy and sign an Exclusive Buyer Representation Agreement.  This will ensure they have your best interests at heart and can guide you through the process from beginning to close.  This is where you build your TEAM of professionals to successfully help you buy a home.  Click here for a Southern Maine Real Estate Agent

5. Purchase a home you can afford.

It is important to work closely with your mortgage lender to determine what your purchase power is.  You can also utilize one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford.

6. Understand there are many different types of loan programs.

There are a variety of different lenders who offer different loan programs.  When one lender says no, another can say yes! There are plenty of low-interest mortgages that require little to no down payment.

7. Buy in a town with good schools.

In most areas, this advice applies even if you don’t have school-age children. For re-sale purposes, understand that strong school districts are a top priority for many home buyers who do have school-age children, which boosts home property values. Southern Maine Property Seach.

8. Choose carefully between points and rate.

When picking a mortgage, you usually have the option of paying additional points in exchange for a lower interest rate.  Points are an upfront portion of the interest that you pay at closing.  If you stay in the house for a long time, typically 3-5 years or more, it’s usually a better deal to pay down the rate with the points which will save you more in the long run.

9. Do your homework before making an offer.

This is where you work closely with your buyer agent to understand the sales trend of similar homes in the neighborhood. So before making and offer, consider sales of similar homes in the last 3-6 months. Again, your buyer agent is the expert and can guide you with how to make a great offer.

10. Hire a home inspector.

It is imperative to have a neutral party inspect the home to help you get familiar with all the systems of the home and to determine the condition and quality of them.  Their job will be to point out potential problems that could require costly repairs down the road.

If you are looking to buy/sell a home please call me.

Craig Candage

Landing Real Estate

207-653-2483

craig@landinghomesmaine.com

First Time Home Buyer in Maine – No Money Down Mortgage

Because the allure of living with mom and dad forever or conversely renting into oblivion might not appeal to you all that much, when you hear a term like first time home buyer loans with zero down, you may be interested to find out just what that really is all about.

These NO MONEY DOWN Loans are made by mortgage lenders and guaranteed by USDA Rural Development to low and moderate income applicants to buy or build homes (30 year fixed interest rate) in rural areas of Maine. You can view the income requirements here.

The biggest challenge for most first-time home buyers is saving up enough money for a down payment. If you’re tired of living the life of a renter or living with friends or family but you can’t scrape together the sizable amount for closing costs, down payments, and other new homeowner costs, it may be worth it to find out about the first time home buyer loans with zero down offered by lenders like PRMI. Settling down and settling in to a new home can make all the difference for young families starting out.

If you want to learn more about whether or not your dream home can be purchased as a first time home buyer loans with zero down, reach out to your trusted Maine Mortgage Banker and see what they have to say.

Secured Credit Cards for quick tradeline and credit improvement

Oftentimes borrowers don’t have any credit card debt or open lines of credit and this can hurt their scores. For these types of clients it’s recommended they open a secured credit card with a min balance of $300-$500. Problem is where can they get one of these? A simple and easy place for borrowers that need help badly is at capital one.

Here is another link with a list of cards for people with bad-fair credit if the capital one doesn’t work- just make sure it says they report every month to all 3 bureaus.

To apply for a First Time Home loan contact me today!

Seth

Decoding Your Credit Report

Decoding Your Credit Report

Gain a better understanding of the factors that determine your eligibility for a loan.

The importance of financial responsibility is oftentimes overlooked in a materialistic nation comprised of excessive credit card offers, stretched lines of credit and the weakening dollar. In order to boost financial responsibility and provide more accurate information to credit bureaus, the company that calculates FICO scores has introduced a revamped credit scoring system. Many consumers will benefit, but others may face higher interest rates which may affect their monthly mortgage payments. Become one step closer to financial confidence by gaining a true understanding of the factors that influence your credit score.

Determining Your Credit Score
The restructured FICO credit scoring system, created by the Fair Isaac Corporation, is reported to go a bit easier on consumers who make an occasional mistake, yet really crack down on those who have multiple late payments and delinquencies. The weight put on certain factors, like late payments, have changed, while the benefit of authorized-user status has been dropped from the scoring system altogether. These changes may strengthen or slump your score by 20 or more points. Get to know the other factors that impact your credit score by reviewing the details below.

Length of Credit History
The longer your credit history, the better. Lenders like to see that you can manage your credit accounts responsibly over time. Now that credit scoring model ignores authorized-user accounts, it is important for those “piggybacking” to establish their own credit on a new and separate account. The omission of authorized-user accounts from future FICO credit reports will enable credit bureaus to protect lenders from those trying to misrepresent their credit risk.

Payment History
Payment history is one of the most influential factors in determining your credit score. As mentioned earlier, future FICO credit reports will forgive a few late payments, but if your account shows multiple late mortgage payments and delinquencies you may see your FICO score drop.

Amount Owed
Another significant factor that is reviewed by the credit bureau is the amount owed on your credit accounts. Having a mortgage and several credit cards will not classify you as a high risk borrower, but owing a lot of money on several accounts will. Make an effort to keep all credit balances low so credit bureaus and lenders do not assume you’ve overextended your financial capacity.

New Credit
Opening several credit accounts over a short period of time may present you as a risk to lenders. This is especially so for those who do not have a long, established credit history. Try to keep new credit accounts to a minimum.

Credit in Use
Be aware of the types of credit accounts you use. This includes credit cards, financial accounts, retail credit accounts, installment loans and mortgage loans. The FICO scoring program analyzes all active credit profiles when determining your financial responsibility.

Remember, higher credit scores are the most desirable to lenders; but if yours takes a dip, no need to fret, you may still qualify for certain loans and mortgage products. Review your finances and work with Seth Jacobs so that you may better understand the role your credit score plays in your pursuit of an affordable mortgage product.

Keeping You Informed
Call 207-831-1903 today, to learn more about the best loan options for your specific financial situation. Together we can obtain your ownership and financing goals.