So, I'm a loan officer at Stewardship Mortgage. Since that is the case, I thought it would be cool to post something once a week about mortgage topics! Now, you may say, "That sounds boring", but hopefully my amazing writing style will keep you interested. Additionally, I think the information will be helpful!
Today, it's keeping in line with the budget and paying off debt theme of this blog. A lot of people get stressed and panicked when they think about buying a house. They think about costs, fees, down payments, insurance, etc. and can't wrap their minds around everything. Well, instead of worrying about the million things that go into a mortgage, I would say just focus on ONE thing: The Down Payment!
When you buy a house, you have to put in a certain percentage as a down payment. Depending on the cost of the house will determine how much of a down payment you need. I always suggest at LEAST 5%. So, if you buy a $200,000, that will be a $10,000 down payment. Wow, that is a LOT of money. I know I don't have that much cash to just drop on a house. Also, the more money you put as a down payment, the more money you save every month! You get a better rate, which lowers your monthly payment. To be perfectly honest, it's ideal to put 20% down on a house, which is pretty daunting to think about.
So how do you save for that? It could take YEARS to save that much money! Exactly, it will take years. In fact, in order to have a $10,000 down payment, it would take about 4 years of saving $200/month. In my opinion, the BEST way to save for a house is to pay off debt! Imagine if you could put all those monthly student loan and credit card payments towards saving for a house? Saving for a house and paying off debt don't just happen by throwing cash at it, hoping you can save enough. It's about making a game plan! It's about... BUDGETING!
Stephanie and I having certain goals we have written out before we start saving for a house. We figure, putting $20/month towards 10 different things makes no sense. Instead, we use the Dave Ramsey Snowball theory, only with saving. We save like crazy for a new car, then move on to the 3-6 month emergency fund, then move on to another goal. Again, this will only work if we make a budget and keep to it. If every month we are dipping into our savings because we overshot our budget, it's pointless.
I can't stress enough the importance of mapping out your financial goals. However, I can tell you from experience, the people who have saved for the down payment and the cost of buying a house have a MUCH smoother process when they do decide to buy a house. They have options and are picky because of all the time they spent saving that money. If you are married, sit down with your spouse and think of 5 financial goals you have for the next 5 years. Once you do that, it will make budgeting and saving a lot easier because you actually have a reason to keep to that budget!
Also, if you want to buy a house in the next 5 years, lets hang out (I will even provide the coffee)! I will help you make a game plan so that you know when you are ready to buy! I would love nothing more than to help you write out those goals and give you some confidence and knowledge. If you are already in a house, maybe write down how you plan on paying the house off early. Imagine not having a mortgage payment? Think about making that final payment 5 or 10 years early. You can do a LOT of awesome things with that money.
Money does whatever you tell it to do. God is allowing us to use HIS money, so lets use it wisely!
- Brian
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