Thomas Beauchemin's Blog
Buying a home will likely be one of the largest financial decisions you will make in your lifetime. While this may seem scary at first, it’s worth noting that buying a home can also be a valuable financial investment.
When it comes to preparing to buy a home, many people just wait until they run out of room in their apartment before deciding that they need to upgrade to a home. A better approach, however, would be to start planning for your first home a year or more in advance.
Saving for a down payment is a vital step to making the best long-term financial decision. A larger down payment can help you pay off your home sooner, pay thousands or tens of thousands less in interest, and start using your home equity as an asset.
But, saving for a down payment is easier said than done. So, in this post, we’re going to talk about some of the ways you can aggressively save for a down payment so that, when the time comes, you can achieve long-term financial security from your investment.
Setting your savings goals
The first thing you should be thinking about when saving for a down payment is what your goals are in a home. Setting realistic goals in this phase will make saving for your down payment more feasible and less discouraging.
Think about what you really need from a home at this point in your life and compromise where you can.
Remember that on top of your monthly mortgage payments, you’ll likely also be paying for taxes, insurance, utilities, homeowners association fees, and more.
Save on a timeline
When setting your savings goal, make sure you’re aware of the timeframe you’re working with. If you want to buy a home next year, you’ll need to focus on short-term savings options. However, if you’re okay with renting for the next 5 years, investing your money could be a better option.
Lock away your savings
Treat your down payment savings like an emergency fund. Open a separate account, automatically deposit a portion of your pay into the account, and never withdraw from it. To do this, you will, of course, need to already have an emergency fund with a month’s expenses in it.
However, once you’ve established your emergency fund, start immediately depositing into your savings account.
Pay off credit cards
It may seem like saving for a down payment is more pressing than paying off old debt. However, the numbers will show that making interest payments on your credit cards is essentially throwing away money that could have been used toward your down payment savings.
Adjust your spending habits
While it isn’t easy to start spending less once you’ve built a standard of living, there are ways to spend less money and still lead a fulfilling life. Think about where your money goes each month, including bills and services you might pay for.
Now could be the best time to cut the cord and start using a service like Hulu to save $50 or more each month.
Time for a raise?
If it’s been some time since your last pay raise, now could be an ideal time to speak with your employer. To improve your chances of success, don’t discuss reasons outside of work that might be influencing your decision to ask for a raise (such as saving for a down payment). Rather, back up your request with evidence of your accomplishments at work.
Buying a home is a life-changing event. As such, the decision to purchase a residence should not be taken lightly.
For homebuyers, it is paramount to get as much help as possible so you can discover a terrific house at a price that matches your budget. With support from an expert real estate agent, you should have no trouble acquiring a residence that meets or surpasses your expectations.
But what does it take to find the right real estate agent to assist you during your search for the perfect home? Here are three tips that every homebuyer needs to know.
1. Ask Family Members and Friends for Guidance
If a family member or friend recently bought a home, he or she may be able to provide real estate agent recommendations. Family members and friends are trusted sources, and their real estate agent recommendations may help you speed up the process of finding your dream house.
Your neighbors also may be able to real estate agent suggestions. They should be able to provide details about what it was like to work with a particular real estate agent so you can plan accordingly.
Of course, you should still perform plenty of research into a real estate professional's background and expertise before you hire this individual. Be diligent during your search for a real estate agent, and you can employ a real estate professional who will go the extra mile to help you discover a great house.
2. Search the Web
A simple web search of a real estate agent's name may enable you to learn a lot about this individual. In fact, a web search often provides a great way to find out about local real estate agents quickly.
Although a web search may help you examine a variety of real estate agents in your city or town, it is essential to fully evaluate a real estate professional's credentials.
If possible, search for client feedback about a real estate agent. This may help you determine whether to move forward with a particular real estate agent or shy away from this housing market professional altogether.
3. Meet Directly with Several Real Estate Agents
When it comes to finding the right real estate agent, nothing beats a one-on-one meeting.
Set up meetings with several local real estate agents. By doing so, you can get a better idea about whether a real estate agent can help you accomplish your homebuying goals.
It often helps to make a list of questions to ask a real estate agent before you meet with him or her. That way, you can gain the insights you need to make an informed decision.
If you feel comfortable with a real estate agent after a face-to-face meeting, don't hesitate to hire this professional. Remember, the sooner you start working with an expert real estate agent, the sooner you may be able to purchase your dream house.
Use these tips, and you can hire a first-rate real estate agent to guide you along the homebuying journey.
The process of buying a home is anything but cut and dry. There will undoubtedly be some twists and turns along the way. First, you need to be pre-approved for a mortgage. Then, you’ll need to find a home that fits both your needs and your budget. Finally, you’ll put in an offer on a place and hope for the best throughout the rest of the process.
There are plenty of things that you can do as a buyer to make buying a home both easier and more streamlined. Below, you’ll find some of the best tips that are specifically for those seeking to buy a home.
Give Them An Offer They Can’t Refuse
When there is a low quantity of homes and a high number of buyers, competition can get fierce. When the market is like this, you’re not guaranteed to get a property that you put an offer on. It may take making several offers on homes in order for you to finally get the keys to your dream house.
You never want your offer to be too low. A low offer could be insulting to sellers and instead of being countered, could just be outright refused. Make an offer too high and you still have a problem. A high offer may be accepted, however, it’s not going to be approved by your mortgage company for you to borrow that much for the purchase. If an offer is accepted and a home appraises for less, you may be left with thousands of dollars that you need to pay on the spot in order to secure the home.
The best way to present an attractive offer is to work with an expert realtor who can do the appropriate research and let you know what a good offer on the home would be.
Know Your Contingencies
After an offer on a home has been accepted, you need to get to work on the contingencies that you’re going to want on the home. Your realtor will also be a huge advocate in this area. Contingencies will include things like the right to do a home inspection, the appraisal contingency, and the contingency that you’ll only be able to move forward with buying the home if you have appropriate financing. These protect you as a buyer so that if something falls through, you’ll be able to back out of the deal without a penalty.
Don’t Go Credit Happy
Once your offer is accepted and your financing is in place, don’t head out to buy tons of new furniture and appliances for your new home. Your credit matters until you get the keys to the house. Opening new credit cards or adding significant debt can affect your credit score negatively, possibly putting a damper on your home purchase. Hold off on making purchases until after you move into the house.
Buying your first home is a big decision; one that involves a lengthy process of saving money, building credit, and planning the next phase of your life. However, owning a home comes with one major payoff: home equity.
Simply put, home equity is the amount of your home that you’ve paid off. However, it does get more complicated when we bring in factors like the market value of your home and how it shifts over the years.
In this article, we’ll discuss home equity and what it means for you as a homeowner. This way, you’ll have a better idea of what to expect when you finally make that last payment on your home or when you decide to sell.
Home equity and market value
As I mentioned earlier, home equity is more than just the amount you’ve paid toward your mortgage. Like most markets, the housing market shifts over time.
Most homes slowly increase in value over time. In the real estate world, this increase in value is called appreciation.
However, that doesn’t mean that your home is simply going to increase in value indefinitely until you decide to sell. As you will find out (if you haven’t yet already), owning a home can be expensive. Houses age and require upgrades. If you fail to keep up with the maintenance of your home, its value can diminish.
How to build equity
The most important thing you can do to build equity is to make on-time payments to your mortgage. Making extra mortgage payments will help you build equity even faster.
One method of paying extra on your mortgage that many people are adopting is to make bi-weekly payments. Twenty-six bi-weekly payments comes out to 13 full payments per year, the equivalent of making one full extra monthly payment.
The second method of building equity is something that you have less control over: appreciation. However, if you stick to a maintenance schedule for your home and keep it in good repair, you’ll most likely benefit from appreciation over the lifespan of your mortgage.
What can I use home equity for?
The most common way to use home equity is as a down payment or full payment on your next home. First-time buyers who don’t have a 20% down payment saved often buy a starter home and then later upgrade as their family grows and their needs change. In the years that they own their first home, they build enough equity to make a full down payment on their second home, avoiding fees like mortgage insurance.
Many homeowners planning on retiring in the near future use their equity toward their retirement home, often turning a profit in the process. If you plan on downgrading for retirement and have fully paid off your mortgage, you can often use your equity to pay for your next home in cash.
Ready to submit an offer on a house? Before you present a proposal to a seller, it is important to plan ahead as much as possible. That way, you can increase the likelihood of an instant "Yes" from a seller, as well as boost your chances of a quick, seamless homebuying experience.
Now, let's take a look at three steps to follow before you submit a homebuying proposal.
1. Get Pre-Approved for a Mortgage
What good is a homebuying proposal if you lack the necessary financing to purchase a house? If you get pre-approved for a mortgage today, you can ensure that you will have the home financing that you need to make your homeownership dream come true.
To get pre-approved for a mortgage, you'll want to meet with several local banks and credit unions. These financial institutions can offer full details about a variety of mortgage options and help you select one that matches or surpasses your expectations.
Also, if you are unsure about the differences between assorted mortgage options, don't hesitate to ask for assistance. Banks and credit unions employ friendly, knowledgeable mortgage specialists, and these professionals are happy to teach you about various mortgage options.
2. Define a "Competitive" Offer
If you want to acquire your ideal residence, it pays to put your best foot forward with your homebuying proposal. Because if you submit a "lowball" offer, you risk missing out on the opportunity to purchase your dream house.
A "competitive" offer generally accounts for the condition and age of a house, along with the current real estate climate. Thus, if you evaluate a wide range of housing market data, you may be better equipped than ever before to submit a competitive offer on any home, at any time.
Take a look at the prices of recently sold houses in your area. This data can paint a picture of the current state of the local housing market.
Furthermore, find out how the home that you want to buy stacks up against similar houses that are available in your city or town. With this information, you can further refine your homebuying proposal.
3. Consult with a Real Estate Agent
A real estate agent is a must-have, regardless of where you are on the homebuying journey. In fact, this housing market professional can help you can make the best-possible choices at each stage of the homebuying journey.
Prior to submitting a home offer, it often helps to collaborate with a real estate agent. This housing market professional can help you determine exactly what to offer on a home. And if your initial proposal is rejected, a real estate agent will make it simple to reenter the housing market and discover your ideal home.
When it comes to submitting an offer on a house, it usually is a great idea to prepare. If you follow the aforementioned steps, you should have no trouble providing a homebuying proposal that is sure to capture a seller's attention.