How Much Should You Save To Buy Or Build A Home Within One Year?

Written by  //  2015/04/17  //  Home Financing  //  No comments

Whether you are thinking about buying or building a home within the next year or so, you may be wondering how much money you need to save. There are several points to consider to make this determination. Each case is unique, so take time to review and research how these points relate to you.

The Cost of Your Home

One of the most significant factors that influence your financial needs for your purchase or construction project relates to the cost of the home. You may take time to research the current market. Market conditions can change, so you may want to estimate on the high side based on current research. This will help to ensure that you do not fall short of funding.

Your Credit Rating

In addition, your credit rating is also an important factor. Your credit rating will influence your mortgage payment, as well as the type of loan program that you qualify for. You may consider researching loan programs and credit rating requirements to determine your minimum down payment requirement and to estimate your mortgage payment.

Your Budget

You should also prepare a budget based on your projected expenses after closing. Be sure to estimate your property taxes, insurance and utilities costs as well. These will change after you move. Remember that the amount of money that you put down on your home will impact your mortgage payment and your total monthly expenses.

Estimated Closing Costs

In addition to saving money for your down payment, you will also need to pay for closing costs. Closing cost can vary, but a good rule of thumb is to save another one to three percent of your sales price for closing costs. Your mortgage company, real estate agent or builder may credit you for some of these costs.

The Type of Loan You Are Applying For

The type of loan that you are applying for will also influence your down payment requirement. Some programs require you to put as little as five percent down. Others may require you to put 20 percent down or more. You can speak with a mortgage representative about the options that may be available to you.

Your Loan Amount

It is important to note that your loan amount may also influence your down payment requirement. There are different loan programs and rules in place for traditional or conventional loans versus jumbo loans. The minimum loan amount for jumbo loan varies by location. A mortgage representative can help you to determine what your loan amount may be.

There are several factors that can influence each other and that can influence the amount of money you need to save for a down payment. Keep in mind that these factors can change over the course of a year. Therefore, while it is a good idea to set a goal for yourself today, you may want to aim on high so that you can be better prepared to handle adjustments that may take place over time.

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