June 23, 20205 Tips on Saving for a Mortgage Down Payment
Mortgage. Down. Payment. The three scariest words in the home buying process. If saving up money for the down payment stumps you at every turn, keep reading. You may realize that you are closer to buying a home than you think.
- Find Unconventional Loan Options. A conventional mortgage typically requires a down payment of 20%. But there are several loan products with little or no down payments required. These include FHA-backed loans for first-time home buyers, VA loans for former and current military personnel and spouses, and USDA loans for buyers who want homes in “agricultural zones.”It is best that you thoroughly review these loan options with our PEFCU Loan Representative; as they may require a specific income, credit score, or cash in reserve
- Plan for Extra Costs. The mortgage down payment is only a portion of your total costs when you buy a home. As you plan for the long haul, keep in mind that there will be buyer closing costs, which can be estimated when your loan is approved. Don’t forget that there are moving costs (unless you can convince your friends to help on their days off). Also, if you’re breaking the lease to buy a home, you’ll owe your landlord at least double your usual rent payment before you move out.
- Save Strategically. If you only need 5% or less for a down payment, that seems like a much more reasonable savings goal. While saving for a mortgage down payment, remember there are a variety of savings options that keep your funds liquid while offering a higher rate of earning. A PEFCU Share Certificate with a short term of six months to a year or a PEFCU Money Market Account are good choices.
- Restructure Your Current Loans. One of the most overlooked ways to save money is through your current loans. If you have credit cards or other various loans, you could refinance with PEFCU for better rates and payment terms. You could consolidate credit card and loan balances into a single monthly payment if you qualify. When you’re saving for a mortgage down payment, every little bit counts!
- Talk to Us. We’re here to help you live your best financial life! We may participate in first time home buyer programs that don’t require from a large down payment. If you have questions on saving for a down payment on your home or would like to review savings and/or loan options, stop by or give us a call at 1-800-226-6673.
Each individual’s financial situation is unique, and readers are encouraged to contact PEFCU when seeking financial advice on the products and services discussed. This article is for educational purposes only; It does not constitute legal advice. If such advice or a legal opinion is required, please consult with competent local counsel.