Positioning yourself to buy a home takes foresight and planning. A home purchase represents a major financial commitment, and you want to feel good about the purchase when you make it. There are options that can allow you to purchase a home with only 3% down (or even 0% down in some cases). Those options may be best for you, but often, by planning ahead, you can position yourself to pay less in interest over the life of your mortgage. To reach the stage when you’re ready to actually move forward with a home purchase, you should start setting savings mile markers.
Pay Off Current Debt and Create an Emergency Fund
When you secure a mortgage to pay for your home, it represents a significant amount of debt. It also requires a credit check. It’s a good idea to pay off current debt before moving forward with a home purchase. It’s not always possible, but if you can pay off your vehicle, major credit card debt, and student loans before you pursue a home, you’ll be more likely to end up with a favorable mortgage. You should also set up an emergency expenditure fund that can protect you in the case of an unforeseen medical expense or major lifestyle cost.
Set a Down Payment Target Based on Your Price Range
After paying off your debt and creating an emergency reserve, you should start saving for your down payment. How will you know what your down payment will be? This figure is determined by a number of factors. First, you should determine approximately what your home-buying budget is. If you know the total cost of the home, you can determine what your down payment will be. If you need to pay 3% down on a $200,000 home, then your down payment will be $6,000. If you want to put more money down to avoid paying mortgage insurance, you may need something like $40,000. That’s a huge difference for the same home, but it all starts with knowing your home price range.
Don’t Forget to Save for Closing Costs
Reaching the down payment mile marker is a huge achievement. If you have enough money saved for a down payment that is comfortable for you, you may start getting excited about choosing a new home. Before you dive in head-first, make sure you’re saving money for closing costs. Closing costs cover expenses like appraisal, home inspection, credit reports, attorneys, and homeowner’s insurance. This payment is usually 3-4% of your total home cost, so it’s worth saving for. You don’t want to be ambushed by these costs when you’re on your way to closing on your new home.
The Swanson Group Will Get You Ready to Buy a Home
If you’re new to the home-buying process, you may not realize how much planning and saving goes into it. The Swanson Group will help make the process as smooth as possible. Bill, Chris, and Faith are experienced real estate professionals who relish the opportunity to help new homeowners find a place that they love. Contact The Swanson Group in Omaha, NE by calling their office at 402-679-6566.
Buying or Selling a Home in Omaha? Call Bill Swanson Today!
As a long-time resident of Omaha, I know the area and the surrounding communities intimately, and can give you access to information that you could never find online. If you want to know more about the community, are looking to buy a home in a new one, or need the help of an agent to sell your home quickly, conveniently, and successfully, then email [email protected], or call (402) 679-6566.