One of the first steps toward looking for a home is determining your down payment. There are so many questions that come along with it. How much should you pay? What programs are out there that can help with a down payment? What kind of equity can you put into your home? How does your FICO score connect to your down payment? What can you do to prepare for securing the down payment you need to get into a new home?
How Much should you save?
Just as the first step toward owning a home is the down payment, the first step of getting a down payment is finding out how much you need to save. There are loan programs that will allow you to pay a lower down payment, so research of those are available to you. If they aren’t, you will have to pay about 20% of the cost of the home.
To determine a budget you can live with, use the rule that you should pay no more than 25% of your monthly income on your mortgage payment. A mortgage calculator can give you a good idea of what you can spend.
Set a Goal
It always helps you progress when you have a goal in mind. Determine the best way you work when it comes to saving. Find a plan that works best for you. Whether that means you save $200 a paycheck, or $300 per month, you have some ability to save. Take that amount over a year. When you have the amount in mind, along with the intention to reach that goal, in the time that you want to get the money saved, it is easier to find a way to make the dream work.
Find the Best Way to save
To save money that works for you, you will need to be smart about it. You can set aside a certain amount of money each paycheck, but where the money goes will get a long way in determining how much you get. Depending on how much time you have to invest your money, it is best to put money into an account that makes more interest.
Your credit score plays a significant role in not only your ability to get into a home but the amount you will have to pay in interest rates. It is therefore smart to monitor your credit score and make sure you have the best possible rating when it comes time to get home. The difference in your credit score can make a huge difference in the amount of your total loan, so it affects your down payment as well. If you have a lower rating than you think, you can talk to a credit agency to determine ways to increase your score. The best way to improve it is to pay your bills on time and stay below your credit limits.
Financial advisors specialize in helping people achieve their financial goals. As getting into a home is one of the most significant financial decisions a person will ever have, they have lots of ways you can save, budget and cut back on expenses to help you achieve your goals. If you need extra help getting into a home, a financial advisor may just be the catalyst to helping get your best down payment for a home.
Now that you have made the step toward getting a down payment, you can now move toward your goal of getting into a home.