For a lot of newbie homebuyers, saving money for a down payment can be nerve-wracking. But, often saving money is as simple as handling your budget in a different manner. Purchasing a house is normally the biggest single acquisition an individual is going to make in his or her life. If you’re preparing to buy a home, it is vital to know the complexities of what you can pay for, how much everything will cost and how to prepare for your acquisition. Our Toronto Mortgage Brokers want to explain how you can save for your first down payment.
- Calculate how much house you can afford.
Before you begin to save for your down payment, you must first know how much you can afford. Start by utilizing an easy loan calculator. A lot of new buyers don’t take into consideration the different expenses that go with owning a house like property tax, private mortgage for down payments less than 20% and routine maintenance. Add that to your current credit card debt, student loan and monthly expenses and things could get out of control.
- Assess what can you afford to save.
With your monthly salary, minus your expenses per month and what’s left can be your monthly savings. In buying a house, you will pay for lawyers, real estate fees and that you will pay from your savings. To know how you will be paying, contact a mortgage broker, for fees may vary.
- Start budgeting and saving.
If you are among the many who just recently graduated, you must adjust your budget to insert an extra $985 per month. To begin with making a budget, you may have to assess how you spend and check for areas where you can cut – such as not eating out too much and using coupons to save on groceries. By doing this, you can spare hundreds of dollars every month and save for your down payment.
It is much better to save than to spend on unexpected incomes such as tax refunds, gifts, and commission checks; doing so can increase your savings to a thousand dollars per year and will let you buy a house more quickly.
Building Your Equity
After tightening your belt and saving enough to buy your house – not only are you a new homeowner, you’re also creating equity in your house.
Every time you pay your monthly mortgage, you own more of the house. In time, the value of your house will also increase, which will add to your equity. If ever you are going to sell your first house, odds are your next down payment is going to be bigger compared to the sum you started with. It is one way of building your wealth.
Thanks for Rakhi Madan Mortgage Agent for these tips.