On average, the first time buyer has to pay a down payment of 20% on their home. That means they have to find ways to fund a deposit of around $ 20,000.
According to the latest reports, most millennials prefer to own a home rather than rent it. Another 8 out of 10 people under the age of 30 are asking their parents for financial assistance to help with home down payments so they can get their feet on the real estate ladder.
This article will provide you with a step-by-step guide on the options available to you and ideas on how to save up to get your dream home.
What loan options do you have?
Parents have long been the first option when it comes to funding. This can be in the form of gifts, informal loans, or as a co-signer or guarantor of the loan. This means that if you default on the payment, they will pay the loan.
Close friends and family
This is another route that you can take. You can get together with some of your family members or friends to buy a house. The catch is further down the street, however, maybe one of you needs a stake in the house. How are you going to deal with it?
Related: Should I Save For Retirement or House Payment?
How Much Do You Have to Save Each Month?
Now that you understand how much to pay for a deposit, it is time to calculate the amount you need to put in each month.
At this point, a savings plan will help you better understand how much you need to save each month. In addition, it is also important for you to be realistic about what you can afford.
Help with buying from the government
If you are a first time home buyer buying or building a new home, you may qualify for first time home purchase programs.
Here are 10 programs for first time home buyers in 2021:
- FHA loans
- USDA loan
- VA loan
- Good neighbor next door
- Fannie Mae or Freddie Mac
- Fannie Mae’s HomePath ReadyBuyer Program.
- Energy efficient mortgage (EEM)
- FHA Section 203 (k)
Start the savings
Once you figure out how much to store, start saving as soon as possible. If this amount is higher than the maximum amount allowed in the Help-to-Buy program, you will likely need to open a new account if you don’t already have one.
Of course, you’ll want to find an account that supports the best interest and make sure the conditions meet your needs. This takes a little research, and the best place to start is probably with comparison websites.
Compare savings rates on comparison websites
By using price comparison sites, you save a lot of time and at the same time receive valuable information about the best available savings.
Note, however, that these websites may not produce similar results. Hence, it is important that you use several in order to make an informed decision.
Keep track of your savings
After a year of saving, see if you can still get the best deal on savings rates. Also, make sure to take advantage of the ISA allowances offered annually to save the money you would otherwise have paid in taxes.
Getting your first home home can be daunting. However, with a plan, you can achieve the goal even if it takes time. The saving tips listed in this article will help make the dream come true.
Received Down Payment, Now What About A Mortgage?
Once you have saved enough down payment to buy your new home, you will no doubt want to find the best mortgage deal. The key here is research.
Instead of looking for the usual suspects on your local main street, start your hunt online.
There are some great mortgage comparison websites like NerdWallet that have a good mortgage search engine that highlights the best deals they can find.
An independent mortgage broker is not tied to a limited number of lenders. This means they can choose from pretty much any lender on the market, and have many exclusive deals and deals only available through mortgage brokers.
Get them to find the best deals available, then compare them to deals from your own research to find the right deal for you.
Hopefully, if you follow the tips in this guide, not only are you on your way to your dream home, but you can be sure that you have made the most of your savings and have found the perfect mortgage deal for your needs.