Buying a home for the first time is an excellent investment, however, it is important that you have enough money saved up before you begin the home buying process. As your local Burbank mortgage lender, Juan Barraza understands the type of financial commitment involved in buying your first home. So to help you get started, he has provided some useful tips on saving for a down payment.
What Is A Down Payment?
A down payment is a certain percentage of your home’s purchase price that has to be paid for before your Burbank mortgage application is completed. You have to supply this full amount, meaning you cannot borrow this money from any financial institution.
The more you pay towards your down payment, the better your mortgage rates will be. If you do not pay at least 20% of your home’s purchase price, you will be required to obtain private mortgage insurance (PMI). This is an additional monthly fee you will have to pay in order to insure the lender in case you default on your payments. Do not be mistaken, this insurance is paid for by you, however, it only protects the lender.
How To Start Saving
Before you begin shopping the market for your dream home, you must first assess your finances. Go through your common expenses and make a budget. This will help you know how much you can afford to pay towards your mortgage. Once you know your affordability, you will have a better understanding of what price range to shop in for a home. Knowing this amount can help you avoid stretching your finances too far and accruing large amounts of mortgage debt. For specific details on how much you will be able to borrow from a lender, contact your local mortgage broker in Burbank at 818-601-2389.
Another useful tip to help you save money is to limit the amount of time you go out to eat per week. Focus more on making meals at home, and put that money you would have originally spent at a restaurant into a separate saving account solely for your down payment. It might also be a good idea to postpone any family vacations until the following year, and instead, put that money into your savings.
Being organized with your finances and not overspending is the best way to help you save for a down payment. For more useful tips or to get started on your application today, please contact your mortgage lender in Burbank at 818-601-2389.