Buying a home for the first time is a major milestone for adults. This is an exciting time but it can also be a financially stressful time. Purchasing a house and obtaining a mortgage is a huge financial commitment and may be the biggest expense you ever have, especially when you have to pay a specific percentage of your home’s appraised value in order to be approved for a mortgage. This is known as your home’s down payment.
So, to help prevent stretching your finances to the highest possible limit, your local mortgage lender in Smyrna, with Accurate Mortgage Group, has listed some useful tips on saving for a down payment.
Tip #1: Lower Your Expenses
If you pay less than 20% of your home’s purchase price, your lender will require you to pay for private mortgage insurance. This is an additional fee that will be charged either monthly or as an upfront cost, to protect your mortgage lender in Smyrna in case you were to default on your monthly payments. Therefore, you will want to be sure and have enough money saved to avoid paying for an additional fee.
To help prevent these fees, start lowering your expenses today. Consider cooking at home more and avoid going out to eat so often. Maybe even try being a little more frugal with your heater, AC, and water, so your utility bill is not so high.
Tip #2: Additional Source of Income
If money is really tight or you have your eye on a home that is outside your budget, you could look for an additional source of income. Pick up some extra shifts at work or host a garage sale to help clean out your storage and earn some extra cash.
Tip #3: Postpone Expensive Vacations
If you go on an extravagant vacation every year, you may want to hold off for one year and instead, set that money aside for your down payment. Try planning a less expensive trip. This way, you can still enjoy some time off without spending too much.
Tip #4: Set Up Direct Deposit
An easy, mindless way to save money is to set up direct deposit with your bank. With every paycheck, have a designated amount, such as 20%, to be taken out and automatically transferred into a savings account. Set up this savings account specifically for your down payment so you will be less tempted to make a withdrawal.
For more useful tips on how to save for a down payment or to get started on an application for a Smyrna home loan, please contact Accurate Mortgage Group at (615) 833-0456.