Which down payment strategy is right for you?

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advice, Buying a home, buying your first home, downpayment, Jacksonville Real Estate, mortgage loan, real estate tips

You’ve most likely heard the rule: Save for a 20-percent down payment before you buy a home. The logic behind saving 20 percent is solid, as it shows that you have the financial discipline and stability to save for a long-term goal. It also helps you get favorable rates from lenders.

But there can actually be financial benefits to putting down a small down payment—as low as three percent—rather than parting with so much cash up front, even if you have the money available.

THE DOWNSIDE

The downsides of a small down payment are pretty well known. You’ll have to pay Private Mortgage Insurance for years, and the lower your down payment, the more you’ll pay. You’ll also be offered a lesser loan amount than borrowers who have a 20-percent down payment, which will eliminate some homes from your search.

THE UPSIDE

The national average for home appreciation is about five percent. The appreciation is independent from your home payment, so whether you put down 20 percent or three percent, the increase in equity is the same. If you’re looking at your home as an investment, putting down a smaller amount can lead to a higher return on investment, while also leaving more of your savings free for home repairs, upgrades, or other investment opportunities.

THE HAPPY MEDIUM

Of course, your home payment options aren’t binary. Most borrowers can find some common ground between the security of a traditional 20 percent and an investment-focused, small down payment. Your trusted real estate professional can provide some answers as you explore your financing options.

Have any questions or are you ready to start your new home search in 2019? Give us a call today!  Kevin and Jennifer Hanley, REALTORS Keller Williams Realty Atlantic Partners Southside 904-515-2479 http://www.HanleyHomeTeam.com

 

 

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Down Payment Savings Tips

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Buying a home, downpayment, Downpayment Assistance, Downpayment to buy a home, homes for sale in Jacksonville FL, interest rates rising, Jacksonville FL Real Estate, low interest rates, real estate, Renting vs Buying

Every month you pay the rent, you’re probably thinking, “I wish this money was going into my future.” For a lot of would-be first-time home buyers, it’s the down payment which makes home ownership seem impossible. Climbing the “down payment mountain” isn’t impossible. Like any major challenge, it’s all a matter of breaking your big, hairy, audacious goal down into practical steps.

Here are some tips to conquer saving for a down payment:

Find out where your money goes. You can’t start saving if you don’t know where you’re spending. For a month or two, track each expenditure, no matter how small. Get an objective picture of where you’re spending the cash.

Get specific about how much you need to save. Even if you’re not 100% sure what your down payment needs to be yet, it’s good to start doing a little math to figure out how much you need to save. Pick a dollar amount and a timeline to hit that dollar amount. For example, a $25,000 down payment in two years comes to $1,041/month. Sound unrealistic? Either scale down your home desires to something smaller or scale up your timeline. If you can wait three years, that monthly savings goal drops to $694/month.

Determine the big moves you can make. If you’re in a three bedroom apartment and can stomach the idea of scaling down to a one bedroom, how much would you save in rent? What about going from two cars down to one? If you can make it work, these sacrifices will have a huge impact on your savings goals.

Setup a separate savings account. Don’t let your dream home money mingle with your regular checking or savings account. Establish a high-yield savings account with a credit union or money market account to protect and build your stash. It’s important to have a separate account with a “hands off” attitude.

Mind the risky investment schemes. Once you have a little momentum, you might be tempted to take some of that cash and invest it in order to make it grow faster. Be very prudent about this, as investing in stocks, startups, or high-yield funds can easily decimate your savings. Be conservative.

Of course, it’s important to know how much home you want to buy when you’re saving up for your down payment. We’re happy to give you an idea what homes are selling for in your area. Feel free to get in touch any time if you have questions: Kevin and Jennifer Hanley, REALTORS Keller Williams Realty Atlantic Partners Southside http://www.HanleyHomeTeam.com 904-422-7626