At Golden Lenders, our primary goal is to open more doors for our clients along their path to homeownership. Simultaneously, we understand the seriousness involved with making a home purchase. After all, the majority of home loans in the United States involve a 30-year term. Biting off more than you can chew when purchasing a home is a recipe for stress and struggles for years to come. Luckily, we’re here to ensure that nightmare scenario is the furthest thing from your reality. Here are a few tips to ensure you are borrowing and purchasing within your means!
Assessing Your Down Payment Size
We have worked with buyers who have had great success submitting down payments as low as 3% for their conventional loan. When it comes to equity though, 20% is a particularly noteworthy milestone for homebuyers. If you can swing this hefty upfront cost, you are sure to benefit right away by bypassing the requirement of paying private mortgage insurance premiums. Let’s face it, though, 20% is a massive upfront cost that is not feasible for most buyers. If you can’t meet that number for your upcoming purchase, you aren’t out of luck by any means.
Factor in Additional Costs
Your mortgage isn’t the only home related expense you’ll be making after moving into your new space, and you should budget accordingly. Many prospective homeowners can’t help but feel excited when the math seems to check out and they can afford the home of their dreams. The trouble is that they fail to consider thoroughly additional expenses like property tax, interest, and PMI. Those are just home related expenses! Costs will increase quickly if you can envision daycare, car payments, and vacations in your future. In other words, new homeowners are often set up to fail by buying a home they can afford rather than buying a home they should afford.
There are a few industry best practices used to avoid the scenario described above. A simple way to set yourself on a trajectory to avoid this problematic scenario is to set aside enough money for 13 payments on your home per year instead of the usual 12. The extra cushion should provide a safety net for emergencies and ensure you are staying within your means.
How Golden Lenders Can Help You Choose the Right Home
Golden Lenders helps home buyers in Colorado, Florida, Ohio, and California understand the different types of mortgages that are available and provides loans to help people achieve the dream of homeownership. Since the specifics of which mortgage to choose is dependent on a variety of factors, we encourage you to call us for more information and find out which is right for you. Need more information about what to do before buying a second home? Call us! Our number is (303) 482-2361, or you can send us a message.