Homeownership has long been considered the American Dream, and it’s one every American should feel confident about pursuing. But owning a home is also a deeply personal dream. Our home provides us with safety and security, and it’s a place where we can grow and flourish. With the Lowe Team at your side, you can confidently begin your journey toward homeownership by answering the questions below:
1. Where Do I Start?
The process of buying a home is not one to enter into lightly. You need to decide on key things like how long you plan on living in an area, what type of property you are looking for, which areas you would like to live and your monthly budget
When you decide you’re ready to start the home buying process, your first step will be meeting with a mortgage lender to start the pre-approval process. Your lender will look at several factors to determine how much you’re able to borrow, including your credit history and your monthly debt & income.
According to Freddie Mac:
“To get a rough estimate of what you can afford, most lenders suggest that you should spend no more than 28% of your monthly gross (pre-tax) income on your mortgage payment, including principal, interest, taxes and insurance.”
2. How Do I Save Enough for a Down Payment?
Speaking of how much you can afford, you’ll want to know how much to save for a down payment. While the idea of saving for a down payment can be daunting, there are many different options and resources that can help.
According to Business Insider, automatic savings can bring you one step closer to achieving your target down payment:
“If you receive your paycheck as a direct deposit, you may want to arrange for your company to send a percentage of each check directly into a savings account for the down payment. . . . The automatic-savings strategy makes it so you don't have to constantly remember to save money.”
Before you know it, you’ll have enough for a down payment if you’re disciplined and thoughtful about your process. And the best part is, you may need to save less for your down payment than you think. Your lender can help you understand your options.
3. How Can I Reach My Financial Goals?
Another way to increase your savings is by sticking to a planned budget. If you’ve never budgeted before, there are tools available. For example, MoneyFit.org provides a budgeting worksheet you can use to create your own plan and 5 rules to follow when you’re saving. They recommend you:
- Identify Goals
- Record Expenses
- Record Earnings
- Compare and Calculate
- Fix Weak Spots
If you’re already budgeting, consider finding ways to tighten your spending a bit more to accelerate your journey to homeownership. After all, putting even a little extra into your savings each month can truly add up over time.
As you set out to realize your dream of homeownership this year, know that it’s achievable with careful planning. Please contact the Lowe Team so we can meet and discuss your plans, time-frame, search criteria, etc in greater detail