Northwest Bank Offers Guide to Saving for Home Purchase

Buying a home can be stressful regardless of the stage of life you’re in. When you start planning to buy a house, it can be intimidating to think about how much money you must save. However, once you start down the path, it may seem easier than you originally thought.

Homeownership is a way to invest in your future, but it doesn’t have to be a daunting venture. Even in today’s market, owning a home is an attainable goal when you have a plan and are willing to work diligently to save.

Set a goal

When you begin to consider buying a home, it’s important to determine an affordable price range for your house hunt. Homebuying costs, such as the down payment and closing costs, are often expressed as a percentage of the home price. With a purchase price in mind, you can set a specific savings goal.

Start by ensuring you’re financially ready to make such a large purchase. Factors to consider include your total savings, total debt and credit history. These factors will help determine your qualifying loan amount, interest rate, and how much you can afford as a down payment.

When it comes to down payments, the more you can pay up front, the lower your payments and the higher your equity. Savy homebuyers put down 20%. This isn’t a requirement, but doing so could help reduce the interest rate on your mortgage and help you avoid costly private mortgage insurance. In addition, consider closing costs and moving expenses when thinking about your savings goal. Between moving expenses, home furnishings, and any potential mishaps that may arise, it is important to plan to have extra cash on hand to cover these expenses.

Find your savings goal by adding up rough estimates for each expense — down payment, closing costs and other cash to have on hand.

Tighten your budget and save any extra cash

To attain that goal, create a plan. Start by minimizing other expenses. Compare car or health insurance rates to find the best deal. You might also be able to save by researching and finding lower-cost options for services you need such as your internet or cell phone plan. Another option entails refinancing your student loans or auto loans to lower your monthly rates. In addition, make sure you cancel subscriptions you’re not using.

When extra money comes your way, save instead of spending. Whether it is from a gift or extra income, be sure to put it into savings.

Keep your savings in a separate account

Stop by today to visit with a Northwest Bank Personal Banker on what the best option is for you.

Saving to buy a home may feel like an uphill climb. However, small actions add up and make a difference. We are here to help you reach your goal of purchasing your dream home.

Contact your Local Mortgage Banker today for more information.