Every financial dream starts with setting a goal. Whatever your milestones may entail, from paying down debt to building a retirement fund, the first step is to create realistic goals and making a working plan to get ahead.
Buying a house is no different. When you’re thinking about getting your first home, or upgrading to something nicer, it all starts with envisioning your goals, making a list of needs versus wants and creating a realistic savings plan to work towards it. But how much should you save? What should be your target when it comes to getting the keys to your next residence? Check out these tips for making homeownership a reality.
Start by Setting a Home Ownership Budget
Before you start looking at home listings and attending open houses, it is critically important to set a realistic budget for what you can afford. Using a mortgage calculator like the ones on the SESLOC website, you can visualize how much your mortgage would be based on different prices and interest rates, giving you an idea of how much you may need to save for a down payment.
Are You Buying Points to Lower Your Interest Rate?
One strategy home buyers may use to reduce their rate is to buy points on their mortgage. Each point costs one percent of your loan – for example, if you took out a $300,000 loan, one point would cost $3,000. In turn, each point typically reduces the interest rate by 0.25%. If you are considering buying points, it’s important to incorporate that into your down payment plans.
Do You Need to Save for Extras?
Your next home may come with “extras” you may not have considered. For instance, will you need new furniture to go with your living space? Will you be doing extra renovations to the home after you buy it? Some of these things cannot be rolled into your mortgage, so you may have to save extra money for them.
Adding extras to your down payment plans helps you rely on your cash dedicated towards your next home and prevents cutting into other funds, including long-term savings and emergency cash, or taking on unnecessary debt. With a smart outlook that considers all of your home goals, you can create a plan that helps you make the most out of every dollar saved.
Get Help from a SESLOC Mortgage Loan Officer
Not sure where to start budgeting for a home loan? Do you have extra questions about down payments, credit, or other mortgage questions? The Mortgage Loan Officers at SESLOC are here to help you better understand the process and get started on the road to home ownership. Contact our team today and learn about creating goals which will help you take the keys to your next house.