Saving to buy a new house has just become stress-free. Although conforming loans are now much easy to acquire due to reduced down payment requirements, saving is still vital for closing costs and backup money for unavoidable repairs and other expenses that come with owning a house.
Saving a huge amount of money may seem like a big challenge but just the previous year, about 1.4 million individuals purchased their first house – those who bought without any equity from previous homeownership.
Know How Much Down Payment You Need
A lot of lenders are searching for 20% or higher down payment in a normal loan, but there are options that offer low down payment. But small down payment usually is accompanied by paying mortgage insurance from a Toronto mortgage broker. This way ensures the lender from the borrower evading on the loan. When there’s no requirement for paying mortgage insurance, then it can be expected that there are upfront fees. You must be aware of possible loan costs.
Manage Long and Short-Term Goals
Planning for a huge project is quite challenging. For you not be stressed-out or discouraged on the idea of purchasing a house, set targets and additional goals where you can gauge your progress. If saving a certain amount of money is your main concern, try to make some huge changes like renting a less expensive apartment or taking an extra job.
Set a certain amount that you want to save over the next two years and reduce it into bi-weekly or monthly installments. You can pace it and give yourself some motivation. After reaching a particular aim, give yourself a reward for sticking to your plan. Make sure to restrict it to something that doesn’t cost too much such as a spa treatment or massage. Having a break and checking your success can help you to continue.
Saving by reducing your spending is a great way; however, there is another source of savings – those random events that let you spend something for the house such as bonuses, birthdays, tax refunds, and of course, the leading contender of all, weddings.
Although it is tempting to spend a bit of money with these occasional events, these funds can be added to your savings account without getting from your regular income.
Have an Emergency Fund
New house owners must make sure to have an extra amount of money for unanticipated costs. Things like repairs, fixing minor problems and creak and upgrades can be anticipated in owning a new house. If you are artistic then upgrading or decorating is a huge possibility. Just be sure and be smart on prioritizing important maintenance over beautification.
Contact Rakhi Madan Mortgage Agent for more information on down payments.