10 Tips to Save for Your First Home

 By: Amy Smith, Mortgage Planner

Saving money is hard!  But just like anything if you try hard enough the payoff is fantastic.  Follow these not easy but rewarding steps to save for your first home….

1.  Start a budget.  Plan your expenses and budget in an amount for savings every month 
2.  Get a travel mug!  Making your coffee at home to take with you can save you $2 or more a day. 
3. Skip the bagel.  Buy your breakfast when you do your grocery shopping and pack it.
4. Along the same lines – pack your lunch.  Savings $7 a day (or more) on lunch out could be a huge savings at the end of the month.  
5. Eat dinner at home.  We are all busy so getting delivery or eating out always seems easier.  If you cut out dinners out at least twice a month you could save $50 to $100 just for those two sacrifices. 
6.  Review your auto insurance plan.  Make sure you aren’t paying too much because you’ve stayed with the same carrier. 
7.  Stop spending needlessly!  Stick with just your needs for one month and see what that leaves at the end of the month.  Stash it away and do it again.  And again. 
8.  Get rewards cards.  Make your spending work for you!  Saving on gas because you shop one place and earning discounts on your purchases another place help to cut costs for the things you have to buy anyway.  
9.   Have the time?  Get a part time job or start consulting (as long as you aren’t planning to claim a loss on your tax returns).  
10.    Have a yard sale.  Sell all of the stuff you don’t need to drag with you to your new home.

Follow these tips and you’re on your way to putting more money away each month towards the home of your dreams. Ready to begin the home buying process? Request a copy of our homebuyers guide or apply online.

Am I ready to buy a home? Questions to ask yourself before you take the plunge

By Kevin Carey, Senior Mortgage Banker 

Purchasing a home is quite possibly the largest purchase you will make in your lifetime.  Like most people, when I decided I was ready to purchase a new home, I began by trolling the internet and fell in love -  home after home.  I watched video tour after video tour and imagined how I would decorate each room.  I utilized the online mortgage calculator to estimate my payment and then hastily contacted the first realtor who picked up the phone so that I could run out the door as fast as possible to preview my new dream home.  The first words out of my realtor’s mouth were “have you been pre-qualified?” It was at that exact moment that I panicked and thought to myself, am I ready to buy a home? If you have ever felt this way then you need to ask yourself the following questions:

How do I start the process?

The first place to start determining if you are ready to purchase a home is to determine your budget.  The mortgage lender will use your gross monthly income (the income you receive prior to deductions such as taxes, medical insurance, 401K) to determine how much you qualify for. However, since we live on our net income (income you received post taxes, insurance, retirement…) it’s important to create a budget for yourself by first outlining the amount of money you spend on all of your liabilities such as car payments, credit card bills, student loans. You also need to calculate how much money you spend on groceries, eating out, leisure activities, gas, car maintenance etc..  Make sure you build in a buffer to account for home maintenance and utilities.  

How much you would feel comfortable paying for a mortgage each month?   

Keep in mind, many online mortgage calculators do not include property taxes and homeowner’s insurance.  These items are integral parts of your monthly payment. Click here for a great calculator to help you determine whether buying or renting is right for you.

How long you want to live in this house?  

What is your 5 year, 15 year and 20 year plan?  Do you plan to have children while living in this home?   Evaluating your long term goals will help you make an educated decision on the type of house your want to purchase.  

At this point in my home buying process, I realized I had made a lengthy list of questions that needed answering.  Who do I call?  Who can I trust?  Are you ready for the answer?  Are you sitting down?  Your next phone call should be to a qualified, educated and experienced mortgage lender.  The right mortgage lender can help you identify your goals and create a plan to reach them.   

Most of us think of our mortgage as simply the largest debt we carry.  Your mortgage lender will be able to show you ways to utilize your mortgage to save for retirement, and pay for college, but most importantly, your mortgage lender should be an individual that you create a lifetime relationship with.  [Be sure to ask what they will do for you after your mortgage closes. Will they provide you with a quarterly or annual mortgage analysis? 

Take the time for goal setting, self-reflection, connecting with a qualified mortgage lender and most importantly— happy house hunting!

Click here for more information on mortgage planning or to request our guide to buying your next home.
 

The Home Buying Process

By: Stewart Zemil, Chief Operating Officer

Home ownership has always been a major aspect of the American dream.  Regardless of your home buying experience, buying a home can be an overwhelming process. Understanding the steps of this process will help make the experience more manageable and enjoyable. With over 20 years in the industry, I’ve worked with many families to help achieve their homeownership goals and wanted to share the full process and some tips! Now is a great time to buy a home, here are the steps to get you into the home of your dreams:

1. Start savings towards your down payment
2. Set a personal budget
3. Get pre-qualified/pre-approved: Give me a call! We’ll set up an appointment to meet and review your employment/income/assets/debts and pull your credit report to determine the loan size you qualify for, and the type of loan program that meets your needs. Getting pre-approved not only helps you shop smarter because you know your finance options before shop, but it also strengthens your offer and lets the seller know you're serious. More to come on the importance of pre-approvals in a future blog!
4. Pick a Realtor: Your agent will represent you throughout the entire transaction beginning with determining the area in which you want to live and showing you homes in that area that fit your needs at your pre-approved price range, to writing and negotiating the best price for your purchase. They’ll even help manage all of the required vendors (home inspection, pest inspection, septic, handling the repairs, removing contract contingencies, scheduling a final walk through) until the date of your closing. If you currently don’t have a realtor, I’d be happy to recommend one to you.
5. Finalize your loan: Once you have a ratified sales contract, your next step would be to work with my team and I on the following:
1. We’ll prepare the loan application and disclosures with all current information as of the date we meet
2. Order title
3. Order the appraisal
4. Review the sales contract and disclosures to make sure you are in compliance with our lender’s guidelines
5. Order homeowner’s insurance
6. Process the loan application – obtain third party confirmations on all documents you provided to qualify for the loan in order to verify their accuracy
7. Submit the loan to our in-house underwriting department for loan approval
8. At this point, the underwriting department may request any additional documentation required
9. Once those documents are obtained, we’ll resubmit the loan to underwriting for a clear loan approval
10. We’ll send  the settlement company loan closing instructions and review the final HUD-1 settlement statement for accuracy
11. Review the settlement statement line by line to make sure you have no additional questions 
12. Wire closing funds to the settlement company
6. Go to closing: Our last step is to meet with all parties on the contract at the closing company to review and sign your closing papers. This is your chance to ask the seller any last minute questions about the home, and when you’ll receive the keys to your new home!

If you’re considering a move, I’ll be happy to walk through the home buying process with you one on one. For additional information, visit my website or feel free to review  this homebuyer’s handout I put together which further dives into the loan process.

4 Tips To Save For That Down Payment

In order to save up a huge amount of cash for the down payment on your first mortgage, you need a solid savings plan!

When you take out a mortgage on your new home as a first time homebuyer, the more you can pay as a down payment the better. The down payment on a mortgage reduces the principle of the loan and means that you will be paying tens of thousands less in interest payments over the life of the loan.

Most financial experts recommend that you should save up at least 20% of the value of the home as a down payment. Depending on the value of the home that you want to buy, this can be a serious chunk of money.

The conventional saving tricks of skipping your morning latte and eating dinner at home just aren't going to cut it when saving up this much money! You will need some strategies for saving big.

Here are some tips to help you get closer to that down payment:

Make A Separate Savings Account

No matter how much you have already saved for your down payment, create a new savings account to put the money in. When the money is in your personal account it is so much more tempting to spend it on day to day expenses. Also, a savings account will give you a better rate of interest so that you can help you money grow.

Pay Off Your Credit Cards First

If you have credit card debt, you will be paying interest charges to the credit card company every month. These charges can really add up, especially if you are only paying the minimum on your loans. If you can pay down this debt you will have extra money every month to put into your savings instead.

Get A Part-Time Job

If you want to accelerate yourself towards having your down payment saved up, you could consider taking on a part-time job in addition to your full-time job on a few evenings and weekends.

It doesn't have to be something that you do forever, but even sticking with it for six months to a year will give you thousands in extra income that you can put straight towards your down payment.

Make A Backwards Budget

Do you find that after you have paid all of your bills and your living expenses, there is nothing left over to save? Rather than calculating all of the money that you use on your monthly expenses and then saving whatever is left afterwards, why not make your budget the other way around?

Start off with how much you want to be able to save per month then subtract that amount from your net income. The number you have left is what you have to live off.

You will find that you naturally change your habits to make this amount of money work for you and if it if not enough you can increase your income by getting a side gig. These are just a few ways that you can save up for a down payment on your first home in order to save money over the years on your mortgage.

3 Common First Time Home Buyer Mistakes Can Cost Thousands

Buying real estate for the first time is a very exciting step in life.

It is likely to be one of the biggest financial commitments that you make, so it's very important to navigate the purchasing process wisely.

Many first-time home buyers make rookie mistakes that bring on negative consequences and a lot of frustration.

Outlined below are common errors home buyers make, so you can learn from their missteps and avoid them yourself.

1. Buying More Than What You Can Truly Afford

Just because the bank says that you qualify a certain amount for a mortgage doesn't mean that you have to choose a house at the very top of this price range.

Many people get carried away and buy the most expensive house that they qualify for.

If something unexpected happens, they may find it difficult to keep up with their monthly mortgage payments later on.

Remember that you will also have student loan payments, vehicle costs, credit card bills, health insurance, groceries, retirement savings and other expenses, so make sure that your mortgage payments will comfortably fit within your budget.

2. Failing To Get A Home Inspection

Before buying a house, you should always have a professional inspection done. Not doing so is a big mistake.

You don't want to get stuck with hidden damage that could saddle you with the expense of ongoing repairs.

Hiring a professional to assess the home's condition is absolutely essential before making your final decision.

3. Disregarding Your Future

When you are buying Washington, DC real estate, don't just think about how the home will work for you in the immediate future.

Also consider what your needs will be five, ten or even 20 years from now.

Find out the development plans for the neighborhood.

Look for reputable schools if you intend to start a family.

And consider whether the street's home values are likely to increase or decline in the future.

Your Next Steps

Don't let the home-buying process overwhelm you!

Learn from these common first-time home buyers' mistakes, so you can avoid them.

A great next step toward planning for your first home purchase is to consult with a trusted, licensed mortgage professional who is trained in providing the best advice on how a new home will affect your budget.