Tag Archives: Real Estate

First-Time Homebuyers: 6 Tips to Save for the House of Your Dreams

According to a 2015 BMO Harris report, 52 percent of Americans plan to buy a home in the next five years.  Saving for a down payment, typically between 5 to 20 percent of the home’s value, is one of the biggest challenges for those aspiring homebuyers. The American Bankers Association Foundation is highlighting six tips to help consumers cut costs and start saving.

“A down payment is often the largest single payment a consumer makes in their lifetime and saving for it isn’t easy,” said Corey Carlisle, executive director of the ABA Foundation. “However, with a few changes, consumers can put themselves on track to make their homeownership dream a reality.”

The ABA Foundation offers prospective homebuyers these saving strategies:

Develop a budget & timeline. Start by determining how much you’ll need for a down payment. Create a budget and calculate how much you can realistically save each month – that will help you gauge when you’ll be ready to transition from renter to homeowner.

Establish a separate savings account. Set up a separate savings account exclusively for your down payment and make your monthly contributions automatic. By keeping this money separate, you’ll be less likely to tap into it when you’re tight on cash. If you received a tax refund, consider putting all or a portion into this account.

Shop around to reduce major monthly expenses. It’s a good idea to check rates for your car insurance, renter’s insurance, health insurance, cable, internet or cell phone plan. There may be deals or promotions available that allow you to save hundreds of dollars by adjusting your contracts.

Monitor your spending. With online banking, keeping an eye on your spending is easier than ever. Track where most of your discretionary income is going. Identify areas where you could cut back (e.g. nice meals out, vacations, etc.) and instead put that money into savings.

Celebrate savings milestones. Saving enough for a down payment can be daunting. To avoid getting discouraged, break it up into smaller goals and reward yourself when you reach each one. If you need to save $30,000 total, consider treating yourself to a nice meal every $5,000 saved. This will help you stay motivated throughout the process.

Look into state and local home-buying programs. Many states, counties and local governments operate programs for first-time homebuyers. Some programs offer housing discounts, while others provide down payment loans or grants. Stock Yard’s Mortgage Banking Group can help you determine what types of offers are available in your area.

Information provided by the American Bankers Association.

How to Buy Your First Place Like a Pro

So you want to buy your first home. Congratulations! Now, where to start? Melinda Golde from our Mortgage Banking Group was able to share some helpful tips for those looking to buy their first home.

Check Your Credit

Your credit score is one of the most important factors when purchasing a new home. It can affect the credit decision on the loan as well as the actual cost of the loan – the lower your credit score, the higher your interest rate may be. Your homeowner’s insurance premium can also be affected by your credit score Before applying, review your credit by accessing your information at annualcreditreport.com. Make sure there are no mistakes, unpaid or past-due accounts or collection accounts. If you have items on your credit report that need to be repaired, or you just have limited credit experience, you will need some time to work through and correct those issues – you should allow at least six months before shopping for a new home.

Organize Your Documents

As part of the home-buying process, your mortgage lender will require you to document your income and your assets. Make sure you have your two most recent pay stubs, the previous two years’ W-2s and tax returns, as well as your two most recent bank statements (all pages). Buying a home can be a long process, but having your documents organized can help.

Determine How Much Down Payment You Will Have

There are many loan programs available that do not require a down payment of 20% of the purchase price. Some programs require as little as 3% down with 0% down options available for rural properties or active and retired military personnel. You may even be eligible for down payment assistance. (A down payment less than 20% may require mortgage insurance that could affect the payment).

Review Your Cash Flow

Determine where your money is going each month and then compare that to how much you make (gross monthly pay). You may even go as far as tracking your spending for a couple of months. What kind of house payment are you comfortable with based on your current income and liabilities?

Get Expert Advice

A pre-approval is a valuable tool to have as you begin your search for your new home. At Stock Yards, there is no charge or upfront fee for this service. After you are pre-approved, work with a real estate agent that has knowledge of the area in which you’d like to purchase. Give the agent an idea of the type of home you are looking for and the amenities that are important to you, and they will do the leg-work.

Make sure to check out our website for more information regarding mortgage services. Just purchased your first place? What are some tips that we left off?