Post # 17
We went with a FHA loan and are putting 3.5% down. We ended up saving our tax return from last year along with a small inheritance from Darling Husband grandma. Other than that we have continued saving monthly for the added expenses like furniture and maintainence.
Post # 18
We really didn’t save, since all the money we were saving went to the wedding…. we just kinda found a house and fell in love…so luckily it was a foreclosure and we only had to put down 3.5 % down and we only had to bring 400.00 to closing.
Post # 19
Post # 20
I agressively paid off my car and credit cards. I also modified my student loan so that I’d be paying interest only for 2 years. Then I took all the money I had been spending on those things and put it into savings. I ended up putting 5% down.
You should also use a program like Turbo Tax or H&R Block to figure out how much you’ll save on taxes with home ownership. Basically, my savings worked out to being able to pay for my condo fees. In order to do that you’ll need all your income tax info, plus the amount of property taxes + interest (including PMI) you expect to pay.
Post # 21
I agree with whoever said to buy your credit score. You can get your credit report for free online, but defintiely make sure you buy the credit score with it. That will help you determine if you’ll get a good rate on your loan.
Make sure you don’t over-extend yourself either. Just b/c you are pre-approved for $500K doesn’t mean that you can afford that! You’ll have to take into consideration your escrow for taxes and PMI if you put less than 20% down. Closing costs also should be taken into consideration as well. Ah…and furniture/appliances! Something you might have to budget for in case the previous owners took the fridge :o)
Make a budget. See what both of you could put away each month and stick to it like glue. It will then also help you figure out what you’ll be able to afford each month. Try to save on luxuries that you have now. If you buy your lunch every day, start packing it the night before and bring lunch. If you go out to dinner twice a week, scale it back to once every 2 weeks.
Post # 22
Darling Husband and I were already done with schooling and had steady jobs. We were fortunate enough to live homes in between school and buying a home so this allowed us to save. If you are not currently renting I would recommend doing a household buget (mortgage, insurance, taxes, utilies, etc.) and put that into savings every month. If you aren’t able to do that much then you aren’t ready to buy a house but put whatever you can aside and this will help you save for a downpayment.
Post # 23
If you don’t put down 20% I’m 99% sure you will need to pay a PMI (Private Mortgage Insurance). It’s basically insurance you pay to the bank every month as part of your mortgage payment, just in case you weren’t able to make payments down the line.
Usually the amount is cheap money – like my mortgage payment is roughly $1300, and $28 of that is the PMI.
- save save save (but you knew that)
- find an agent that sees eye-to-eye with you (not just someone who is focussed on cashing in on the sale… buyers agents usually get paid a percentage of the sale price (2-2.5%) from the sellers, so don’t let an agent talk you into buying a more expensive house if you aren’t sure you can afford it)
- get pre-approved (sometimes the agent will recommend lenders to use, otherwise start by talking to your bank)
- do the research on what it would cost on average for various utilities once you find a place (gas/electric/cable).
If I think of more, I’ll update 😉
EDIT: yes, everything that @2PeasinaPod said 🙂
Post # 24
PPs have lots of great ideas.
Whatever you do don’t shop around for a mortgage and have your credit checked multiple times!! This will absolutely put a red flag on your account and will make it way more difficult to get a mortgage.
For clients that are just thinking about buying a home I always ask that they get a pre-approval first. This gives them a good idea of where they stand and then they can see what their montly payments would be at their max and work backwards from there to get to where they are comfortable.
ETA: Here’s the thing, because mortgage rates are so low unless you have NO other debts there is no reason to pay down your mortgage faster IMO. I would rather use my savings to pay off credit card debt or another high interest loan before I put it towards a downpayment on a home.
Post # 25
@Tswife4ever: there are a LOT of foreclosures out there and they are def. worth it!!
Post # 26
@nickels: Thanks for all of the tips! That’s really helpful.
Post # 27
So many things to think about — it’s so great to hear your experiences! I think something that the OP was wondering about (and that I am, too) is how everyone went about saving. What strategies did you use to save such a sizeable amount of $?
Post # 28
@Gemstone: We started off with a nice amount from our wedding gifts, and we built from that. We were already in saving mode from the wedding, and once that came and went, we just continued with what we were doing. Some things to think about that can reduce your spending:
- bring lunch every day rather than buying it
- make your coffee at home rather than buying a cup at Starbucks or Dear Daughter every day
- Eat out less and eat take out less.
- If you’re making dinner one night, make a little extra so that bringing leftovers for lunch is easy.
- Call your cable company and ask what you can do to reduce your bill. Threaten to go to a competitor – they almost always will give you the promotional deal that’s going on right now.
- Hang your clothes to dry on drying racks rather than throwing everything in the dryer (small, but every little bit helps!)
- Clip coupons! Getting the Sunday paper so you get coupons – the savings you get from the coupons outweighs the amount you pay for the paper.
- If you have this at your company, contribute to an FSA for your out of pocket medical, dental and vision expenses. If you are confused by how it works, PM me and I’d be happy to explain!
- Have a set amount (even if it is only $20) taken from your pay and direct deposited into an account you just plain won’t touch. You won’t miss that $20, and it slowly accumulates over time…put as much as you can away or increase it by $5 or $10 when you can.
- Think of the things that you spend the most money on each month, and see where you can cut back. Every small cut back adds up. Then make sure that money goes into your savings!
Post # 29
Post # 30
Save save save! What we are going to start doing soon here is estimating what we would be paying if we had a mortgage. Then, pretending THAT is what our rent is every month (so, paying $1800/mo rather than 1100/mo, for example). This does two things….1) we see whether we can handle a mortgage payment, and of what amount and 2) the difference between the fake mortgage amount and our actual rent goes right on into savings (in the example above, $700/mo).
Post # 31
So subcribing to this thread!