Saving a pile of money for your down payment on your first home is easier said than done. Consider these tips for first-time home buyers.
Owning a home is a dream come true, but owning a home remains a dream for most people because of skyrocketing house prices. Fortunately, you can always opt for a mortgage — an economically friendlier way to purchase your home. In fact, in 2020, approximately 44% of consumers in the US have a mortgage and for all the right reasons.
Before taking out a mortgage, lenders will require you to pay a deposit, usually 3-20 percent of the mortgage amount. This can be a tad daunting for some people, maybe because of financial indiscipline, unexpected events, or other reasons. If you’re wondering how to raise your first home loan deposit, we have compiled a comprehensive list that will help you get your deposit quickly.
1. Be Realistic
Being overly optimistic is a mistake most individuals make when buying their first home. Most homebuyers are out to look for their “forever” home, which most likely is in a price bracket they can’t afford. Remember, you don’t need to have everything on your first go. Instead, set realistic goals and expectations to ensure you don’t run into financial complications on your journey to the property ladder. After all, you can always save up and, with time, sell your first home and buy your dream home.
2. Create a Comprehensive Budget
A budget acts as your guiding light towards your financial goals; your home deposit in this case. Creating a budget helps you manage your finances accordingly and gives you control of your money. When creating a budget, ensure you factor in the amount of money coming in and out of your bank account. The more detailed your budget is, the better it will be for your financial management. Look for areas where you can cut back, and remember to always stick to your budget.
3. Set a Savings Target
Goals are easier to achieve when they’re clearly defined. That’s why you need to set a target for your savings and save away. As mentioned earlier, always remember to be realistic and practical with your savings to avoid frustrations. To set a savings target, all you have to do is consider the mortgage amount you want and the amount the lender requires as a deposit.
4. Reduce All Other Debts
It’s normal for lenders to inquire about other debts before approving your mortgage. So if you have any other debts like car loans or credit card loans, you best clear them pronto or at least reduce them. If you’re having trouble clearing your debts, you can always consolidate them or seek help from a reputable financial adviser. A financial advisor will advise you on the best ways to save or reduce debts.
We’re Here to Help
A helping hand during the home-buying process is priceless, and if you’re looking for the best mortgage lender in St. Louis, Missouri, then look no further. Sean Zalmanoff and the Better Rate Mortgage team are here for you. We have incredible mortgage offers and smooth pre-approval processes. Give us a call today!