Categories
Investing

How to Save Up to Buy a House

This is a question that is being asked over and over again. How much will my house cost? Can I refinance my mortgage? Especially now that rates are so low, many homeowners are looking to refinance. Maybe you haven’t purchased a house yet but you want to in the future. If you want to know how much you need to save to buy a house you may want to use a mortgage calculator to see what your monthly payment may be. Let’s take a look at what determines home values and how you can figure out how much your home may cost.

What Determines My Home’s Value?

Public School Zone Districts

There are several factors that determine the value of your home. In America, one of the biggest factors is the school zone. Because your property taxes pay for the local school, bigger more expensive homes naturally contribute more in property taxes and usually have better schools. The public schools can afford to hire better teachers, stock the classroom with more supplies and sponsor extra curricular learning activities like field trips. Usually schools in low income neighborhoods have less in the way of funding and therefore, the teachers are usually not as good. So when you are looking for a home remember that a good school zone is a factor in the price of your home whether you have children or not.

Government Properties

Some homes have a lower cost because of government subsidies. For example, there is a program for Veterans that will allow you to purchase a home for a cheaper price if you have served time in the military. There is also a program called Section 8. With this program the government offers a subsidy to those with low income.
There are also programs to help with the upfront cost of purchasing a new home. If you are asking how much can I borrow then you should also know about private mortgage insurance. If you put up cash of less than 20% of the home’s value, then you will have to pay private mortgage insurance. There are government programs like the US Department of Housing and Urban Development. They can provide education on what it will take to purchase a home. Even if your home had a lower cost, it doesn’t necessarily mean that it has a lower value. You should seek the advice of a qualified appraiser to find out what your home is worth.

Location Location Location

The last and possibly most important factor in the value of a home is the location. If you are in a location with lots of development, you can be confident that the developers see opportunities in your area. When you are ready to sell your home most likely there will be buyers ready to purchase your home.

Whether you decide to refinance or you are looking to buy your own home, you need to make sure you are doing your research and save enough to avoid unnecessary fees. Compare mortgage rates in your area.

How to Save Up to Buy a House

Getting on the first rung of the property ladder has become increasingly difficult in recent years. Banks usually ask for a deposit of twenty per cent, a fact which generally leaves prospective first time buyers reeling.

So saving up to buy a house can be trying, especially if you have to pay rent on your current house or flat. It is essential to be prepared to cut back on your current expenditure to be able to save up for your deposit.

Here are a few ways you can get your spending into line and raise enough money for your dream house.

Set a target

You should try and set yourself a target for every month, this will help to motivate you and keep you on track. By calculating how much money you need to save every month and setting up a direct debit, which takes money out of your account every month after you have been paid, you will have a realistic idea of how long it is going to take to save up enough money for your deposit.

Shop around for the best interest rate

By looking into all the different types of bank accounts you will be able to get the best interest on your savings. Bank accounts offer differing interest rates, so make sure you shop around for the best deal. Search to compare mortgage rates in your area.

Curb your spending

Every time you avoid spending money on luxury items you should pay the amount you would have spent into your deposit savings account. You will be able to put away a significant amount of money by doing this.

It also keeps you in the saving frame of mind and every time you look at the balance on the account you will be spurred on.

Find cheaper accommodation

Moving in with your parents, if possible, will save a huge amount on your bills and rent. If this is not an option then you could consider finding cheaper accommodation. Every dollar you save on your rent can be put towards your new home.

Compare energy prices

There may be cheaper companies out there and by switching energy providers you could save a significant amount of money. You should also look at your bills; do you really need a car or cable TV?

Could you repair a garden hose on your own and save money on your water bill? By cutting out little luxuries you will be surprised at how fast you can reach your target.

Save every dime

Put all your loose change to one side at the end of every week. It may be a small amount of money, but every little counts.

What type of tactics do you use to save for a large purchase?

Search to compare mortgage rates in your area.

Originally posted 2012-09-10 06:00:28.

Categories
Homeownership

How Much Home Can I REALLY Afford? Mortgage Calculator

Are you ready to buy a house? We’ve previously talked about what you should save to buy a house but what if you have saved and you want to know how much your monthly payment will be? That’s where a mortgage calculator comes in. There are mortgage calculators online that will estimate certain inputs for you but you might be wondering what those inputs mean.

What Makes Up a Mortgage Payment?

A mortgage payment is the payment on the loan that was borrowed from the lender. Unless you are paying cash in full, you will have to borrow the balance. You will typically borrow from a bank, but there are other ways to pay for the balance, like borrowing from a hard money lender, securing owner financing or contacting the Mafia.
Ok, I was joking on that last one, but I just wanted to make sure you were still paying attention. 🙂
Click here to find a lender in your area.
There are several components to a mortgage payment but the two basic components are principal and interest. The principal is essentially the purchase price, or borrowed amount on the home. The interest is the payment you make for borrowing the money. A loan will amortize, or pay off, over its life. The payments at the beginning of the loan term will be mostly interest but as the loan is amortized and the principal shrinks, the loan payments will be mostly principal.

Taxes and Insurance for Homes

It is absolutely essential to protect your home with insurance and so most mortgage calculators will want you to estimate the insurance payment to factor that into your mortgage payment. There is also a possibility that you will have to pay private mortgage insurance or PMI, if your down payment puts you at less than 20% equity. According to the Mortgage Insurance Companies of America, average PMI will run you about 50 to 80 dollars a month on a home priced at $159,000. You also need to remember that you will have to pay property taxes as a homeowner and that could affect your monthly payment if the mortgage payment makes prepaid tax payments.

Interest Rates and Credit

Before you even start shopping for a home, you should check your credit report and make sure that everything is accurate. There are a variety of factors that go into a bankers decision to loan to you but you don’t want to get denied because there is erroneous negative information on your credit report. The mortgage interest rate that you get is directly influenced by your credit worthiness, as determined by your credit score and what’s on your credit report so be sure to check it. Then, shop around for mortgage lenders to find the best rate.

Using a Mortgage Calculator

The best part of using a mortgage calculator is the ability to play around with the numbers and test different home prices, interest rates and loan terms. Now that you know what goes into the calculation, try it yourself!

Have you used a mortgage calculator to estimate your monthly payments?Compare mortgage rates in your area.


Search to compare mortgage rates in your area.

How To Qualify for a Mortgage as a Young Adult

Moving out on your own is a big deal, especially if you are purchasing your first home right out of living with your parents. Many young adults assume that you need to wait until you are in a certain age bracket in order to purchase a home, but nothing could be further from the truth. Following the steps below will help any young adult find their way through the housing market and on their way to purchasing their own home.

4 Steps to Buying a Home as a Young Adult

Get Your Credit in Order

As long as you didn’t go out and sign up for several credit cards as soon as you turned 18, then you likely don’t have much if any credit at all. Having no credit is just as bad as having bad credit. Try to sign up for one major credit card and one department store credit card. This will help show a revolving credit history.

Make an Appointment With a Lender

Meeting with a lender and discussing what you need to do to purchase a home is a great second step. They’ll be able to run your credit, let you know if you have any issues that need to be resolved, or if you can move ahead fairly quickly with obtaining a loan. Click here to find a lender in your area.

Find a Home

Once you’ve met with the lender they will give you an idea of the mortgage loan amount you’ll qualify for. A real estate agent will be a great tool in finding a home within your budget. Keep in mind that homes outside of your budget can sometimes be talked down to your budget or close.

Gather your Documents

Once you’ve found your home, had you’ll need to get your loan approved and this require important documents. You’ll need to gather any tax returns you have; if not possible your lender will discuss what else they can use. You’ll also need proof of income you have, social security card, banking information, and photo ID. Each lender is different and may require more or less documents; this should be discussed with you your initial visit.

Once all 4 steps are completed you shouldn’t have to wait too long before your new home is yours and a set of keys is being handed to you. Be sure to shop around to different lenders before settling on one, each one specializes in something different and you may be eligible for programs that help with down payments, closing costs or reduce the interest rate on your home loan. Compare mortgage rates in your area.

Originally posted 2011-11-08 10:00:52.