Saving for your first home can be a daunting task, but as long as you create a strategic plan and set realistic goals you’ll finally be able to get the keys to your first home.
Research The Home Buying Process
Before you ever start saving up for a down payment on your first home it’s important to educate yourself about the home buying process and what to expect. Knowledge is power! It’s best to know what you’re getting yourself into as it could be one of the biggest financial decisions of your life.
Learn about what types of Mortgages we offer as well as the ins and outs of Private Mortgage Insurance, Homeowners Insurance, and more.
Build Up An Emergency Fund
Before purchasing a home, it’s a good idea to build an emergency fund to protect you and your family. Things can and do go wrong after buying a home, so saving up for emergencies can keep you financially stable and ensure you can make your mortgage payment on time. Most people save up three to six months worth of expenses for their emergency funds.
Know Your Budget
Determine what amount you can afford comfortably before saving for a down payment. Conventional wisdom says that you shouldn’t spend more than 28% of your monthly income on housing expenses. Use our calculator to get a rough estimate of how much home you can afford.
Determine How Much You’ll Save for a Down Payment
While there are loans that allow 10%, 5%, and even 0% down that may not always be the best option for your situation. Putting down 20% toward your home will mean that you don’t have to pay an additional cost for private mortgage insurance (PMI). This protects the lender in case you put very little down toward your home and eventually stop making the mortgage payment.
Plan A Timeframe
Now that you know how much house you can afford, and what you’re comfortable putting toward a down payment determine how long it will take you to save up for a down payment while also paying down your debts. Do you have other debts that need to be paid down? Student loans? Car payments? It’s best to pay down as much debt as possible before purchasing a home.
Cut Your Expenses
Find creative ways to cut some of your spending so you can pay down debt faster. Instead of purchasing new clothing every month, start shopping at second hand stores for clothes. Cut your cable. Find new phone plans that are cheaper than your current provider. Meal prep at home instead of going out for lunch every work day. Only eat out for special occasions.
Let United Financial Help!
We’d love to help you save for your first house. We can assist you with mortgage pre-approvals, savings accounts, and more to get you into the home of your dreams. Stop into one of our many locations today or give us a call.