Final 3 Down Payment Program Myths Debunked
by Beth Kotz
If you’re used to living in a cramped apartment and paying rent to a landlord who never fixes anything, then you’ve probably dreamed about ending the tenant life and finding yourself a home to call your own. It doesn’t need to stop as a dream, nor does homeownership require extraordinary wealth. With some prioritizing, planning, research and smart money management, you can afford a down payment on a home.
Homeownership counseling helps new buyers understand what to expect in the home buying process, as well as identify how to budget and plan for things like closing costs, home repair and maintenance. You’ll also learn how to improve your credit and get a plan ready for your homeownership goal.
You can also check out online homebuyer education options to do the courses on your own timeline.
Determine your ideal monthly budget for your home payment and then begin to interview lenders about your loan options and programs that may work for your situation. As a first-time homebuyer, this may feel like a complicated process; don’t be afraid to speak up and ask for clarification whenever necessary.
There are many variables involved in what loans and programs you may be eligible for. You’ll want to look at the short and long term impacts of your home loan options.
If you’re someone who spends money freely and doesn’t pay much attention to their bank account balance, it’s time to rethink those habits. Don’t let careless spending on food, trips to the bar and shopping chip away at your bank account. Look for ways to lower expenses, such as cutting back on non-essentials (Do you need ALL the cable? Are you really using that pricey gym membership?) and opting for the store brand products when shopping.
Don’t make any major purchases or take out additional lines of credit when you are also applying for a home loan. It may negatively impact your loan options.
There are many low down payment loans available today. Plus, most loans can be paired with a grant or forgivable loan for your down payment, helping you save money and gain immediate equity.
From government-insured loans to bank programs for low-income borrowers, there are multiple mortgage vehicles you can use to get on track towards achieving your dreams of homeownership.
Sometimes doing everything you can to hold onto your money isn’t enough, as your job just doesn’t pay what you need to afford a down payment. Look into ways to earn extra money on the side, such as freelancing or driving. It doesn’t need to be a huge commitment, but a few extra hours of work a week dedicated to your goal can really add up.
Make saving a habit, just like brushing your teeth. Put a portion of each week’s paycheck every week into a high-interest savings account. Don’t think of your money as something to spend, rather think of it as something to save and invest for the future.
Purchasing a home while still making rent each month is a demanding venture, but the reward is well worth the effort. Put your plan to paper: Where you would like to live? What you need in a home? What’s your ideal monthly mortgage payment?
Then, make a plan for your spending so that your dreams can come true. It will require some self-sacrifice and perhaps new levels of discipline, but with a little help along the way you can put the era of leases, landlords and rental apartments behind you.