Which is a better term – 15 or 30 years?

Buying a home requires a careful analysis of your future financial and personal goals so you can enjoy home ownership, not stress over it. Part of knowing how much you can afford takes into account both current expenses and future expenses (and expenses that you don’t know you will have down the road.) Mortgage payments need to be able to flex to accommodate the unknown and the known. The following tips can help you to estimate the amount of mortgage you can afford.

When you’re preparing to buy a home, it’s important you dive into your finances to explore what room you have in your budget. When looking at what you’ll be able to afford, you will have to examine several factors, like: your household income, monthly debts (car loans, student debt), and how much you have saved for a down payment.

It’s important to truly understand your budget and have a comfort in knowing what exactly you’ll be able to contribute to a monthly mortgage payment. Buying a home is exciting, but you will need to set realistic expectations so you don’t get into a mortgage you can’t handle.

A down payment on a home essentially is the money that a homebuyer gives to the seller to secure the purchase of the home. Your down payment affects the type of home loan you can get, along with what your interest rate and home costs will be. Here are some quick facts from Consumer Finance about down payments.

In most cases, you need a down payment of at least 3% of your target home price. However, many loan types and lenders require 5% down or more.
Oftentimes, you can save money if you put down at least 10% of the home price. If you want to save the most, considering putting down at least 20%.
Typically, down payments are looked at in increments of 5%. Typically, you don’t save more for putting down close to the required amount. For example, if you have enough saved for a down payment of 8% of your target home price, think about whether you could save up a little more before buying, or choose a slightly cheaper home, so you can hit the 10% goal. If you’re unsure about what to do, get in contact with one of our specialists today to find out what would be best for you and your future.
If your down payment isn’t quite what you want it, you have options. To save up fast, try cutting expenses in your budget. This would include doing things like no frequent eating out, no shopping, no cable, and cancelling your gym membership for the time being. These small changes can add up fast with hard work and commitment. You’ll see the dollars racking up before too long! Other tips include pressing pause on your retirement savings, picking up more work, and finding more ways to save money in between the lines.