Have you decided you want to stop renting, and are ready to begin to take steps towards owning your own home? Finding your ideal home is an exciting milestone, but it is one that comes with many financial obligations. Effectively budgeting and saving enough money for a down payment can be one of the biggest obstacles when purchasing a home, but fortunately there are certain steps you can take to help make the process easier. If you are ready to buy a home in the areas of Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, Foundation Mortgage can help. Read on to learn some tips to help you save money for a down payment on a home.
Understanding the Down Payment Amount You Will Need
When making a down payment on a home, the higher amount of money you are able to put down, the lower your loan amount and monthly payments will be overall, which will essentially save you more money in the long run. A down payment of 20% is typically ideal because you will not be required to pay private mortgage insurance at that amount, however, if you are not able to put 20% down, there are still a wide variety of financing options available to help you purchase a home. Non-conventional loans issued by the federal government often have lower down payment requirements, (FHA loans), and some even have no down payment at all (VA and USDA loans). Many types of conventional loans also allow a borrower to purchase a home with a down payment of anywhere between 3% to 15% down.
Suggestions to Help You Save for a Down Payment
When you begin to take steps to purchase a home, you will want to make sure you have a substantial amount of money saved, because there are several other costs associated with buying a home in addition to making a down payment. Some suggestions for saving for a down payment include:
- Attempt to decrease non essential spending, such as eating out at restaurants, purchasing clothing, vacations, etc.
- Try to pay off any large debts, like credit card debt, so you can avoid paying interest charges
- Open up a savings account with a good interest rate and make a monthly savings goal. Then have that amount automatically transferred into your savings account from your paycheck each month.
- You can try to earn additional income by getting a second job, setting aside those paychecks towards your savings
Assistance With Saving for a Down Payment
It can take some time to save up enough money for a down payment, but owning your own home is a worthwhile investment. If you are looking to buy a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and want assistance with saving for a down payment and understanding your financing options, contact Foundation Mortgage today.