According to the latest figures it is now officially cheaper to buy than it is to rent, here in the United States.
Pulsenomics revealed that the percentage of income needed to rent a median-priced home (30%) is double what you need to buy (15%) so surely it’s a no brainer when you’re looking to move out of the family home?
Historically though the down payment has always been the problem, with less people than ever having huge sums of money sat in the bank. We all live to our means and rarely save for that rainy day – instead we just hope it never comes.
But if you are looking to get on the property ladder, and soon, we’ve got five top tips to help you secure that down payment, which incidentally probably won’t be anywhere near as high as you think.
Some government backed schemes, such as the FHA, VA and USDA are currently offering mortgages with down payments of as little as 4.8%, 2.2%, and 0.4%, respectively.
There’s an app for that
Buying a coffee or a sandwich for lunch isn’t going to break the bank but investing all your loose change might make a big difference. Apps such as Acorns take the loose change from your purchases and invest it on your behalf. So if a coffee costs $2.10 then 90 cents will go into your saving account and while you won‘t notice the difference it quickly adds up.
Each dollar is then automatically invested across 7,000 stocks and bonds to help improve your return while reducing risk.
Draw up a budget
When you know the figures that matter, it’s easier to plan and stick to a budget and it helps when you have a target – so finding that dream property should be enough to stop you spending.
You might not want to house hunt until you’re in a position to buy but knowing what’s out there on the market and the price will help you get your finances in order.
Once you’ve found a property you like, the mortgage calculator will allow you to work out what it will cost per month and then you work back.
Taking into account your income and expenditure, and writing everything down, shows you exactly where your money is going and where you can make cuts.
From your income and expenditure form you can then set a monthly and even weekly spending budget and we all know it’s great when you can beat the system and still have money in your wallet on Friday.
Don’t be scared to ask
When you have identified your outgoings, ask yourself what you can afford to live without – surely the end goal of your own home is enough of an incentive?
When you have made the decision it’s worth trying to haggle though as some companies would rather keep you as a customer at any cost, than let you leave. You might not get a permanent solution but they may be prepared to discount their services, at least for a fixed period of time and any saving is better than none.
Keep an eye on your credit
Your credit rating can have a huge impact on how much you can borrow and at what rate, so it’s important to know what to expect so there are no nasty surprises.
Everyone is entitled to access their credit file and this can be done online – helping you to paint the full financial picture.
Truecredit, TransUnion and Credit Check Total are just three sites where you can access your credit record and see the numbers that matter.
According to the Federal Trade Commission it’s worth keeping a close eye on your account because around 20% of all credit reports contain errors, most of which go unnoticed.
The FTC study also found that 5% have mistakes that can drop scores by 25 points, which could dramatically change the borrowing options.
Our final tip today is to make sure you’re realistic in your quest. There is no point setting unachievable goals and deadlines which come and go because it’s easy to become disheartened.
You also don’t want to have to give up everything you enjoy just to make the down payment – the last thing you want is for saving to become a chore.
You are always better to over estimate timeframes that under estimate them and achieving your goals early will always be welcome.
Contact us now on 940-584-0800 to discuss your options.