If you’re thinking of settling down and buying a house, it’s likely that your main concern is about finances. As the move is a major financial commitment, it requires saving up for quite some time to afford a down payment and other related costs. This may then cause you to wonder if you can still enjoy life while trying to prepare for homeownership.
The Amount of Money You Need to Save
Buying a new home starts with saving money. When deciding how much you need to save, you can meet up with a lender. This will help you determine how much house you can afford, as well as understand the different types of loan programs. Mortgage companies in Nashville note that this will also give you an idea about the money you need to set aside for down payment.
The Real Deal with Down Payment
The ideal amount for a down payment is 20% of the home’s purchase price. This is because it means less money to borrow and to avoid private mortgage insurance (PMI), which protects the lender in case you default on the loan. PMI can increase your monthly payments.
While 20% is the ideal number, there’s a number of loan programs that allow down payments as little as 5%. This seems attractive if you don’t have sizable savings, but make sure you understand how it can affect your monthly loan payments and overall household budget.
A Few Savings Tips
Saving for a home purchase doesn’t mean totally giving up certain luxuries and enjoyment. You can still enjoy life and prepare for homeownership by managing your finances better.
- Premium cable is not the only way to enjoy your favorite shows. You can trim your bill and still enjoy watching by switching to streaming service providers, which is a lot more affordable. They can also let you watch past seasons and skip commercials.
- If you feel the urge to buy something that is not a necessity, it is a good idea to match the money you spent and contribute that to your savings. This can help you save more and make you realize how you are spending your money.
- If your goal is to save 20% down payment but feels like it’s taking so long, you may put off of buying first and extend your timeline. Note that it’s never advisable to rush into the buying process. You can also continue saving if you only planned to save 10% and quickly hit your goal.
If you want to learn more about your loan options or the home buying process, contact a reliable lender or a mortgage company today.