How to Save for Your Florida Home Loan
Even as Florida home loan rates continue to rise, buyers are still hoping to purchase a new house. Therefore, the obvious question that arises: how can individuals save up enough money to afford a Florida home loan? Follow some of this advice:
Be serious: If the actual purchase of a house is a few years off, you might have a hard time staying motivated about saving for a Florida mortgage loan. Therefore, it’s important to make the goal feel more realistic by attending the occasional open house starting now. Get yourself excited! You’ll learn what your money gets you in different parts of town and, more important, you’ll start to feel like a genuine home buyer.
Be realistic: Think about how much money you’ll have to come up with. Plan on using 10 to 20 percent of the purchase price on a down payment. Tack on another 3 percent to 5 percent for closing costs. Granted, the numbers may be scary, but it’s better to know and be prepared than to be caught short later.
Cut down on typical expenses: Yes, saving money will probably involve eating out less and clipping coupons. You may have to also purchase a less expensive car or sttle for homemade coffee in the morning. Take a look at what you spend each month, and imagine what you would do if you had, for instance, $150 less at your disposal next month. You’d adjust. It would be worth it for the perfect house in the end.
Make a plan: You can take advantage of the great invention since the Post-It note: known as an automatic investing plan. Open an online savings account (look for a rate of 4.5 percent and no minimum balance) and arrange to have that $150 deducted from your checking account at regular intervals - timed, for example, to coincide with when you get paid at work
Ask for a donation: There’s no shame in getting help from parents with your down payment. They would probably love to help (if they can), and they’d also probably love to avoid estate taxes. Just get it far in advance of applying for your Florida home loan.
“A bank doesn’t like to lend to someone who’s 100 percent leveraged when they’re buying a house,” says financial planner Scott Kahan of Financial Asset Management in New York City.
He suggests securing the gift at least three months before getting a Florida home mortgage loan because that’s how far back most banks check you out. “That way, as far as they know, it’s your money and always has been,” he says.
Borrow, if you must: If you’re close to your target but aren’t there yet - and you see a house you can’t pass up - consider borrowing the remainder of the down payment from your 401(k). The rate is usually good compared with other loans (typically, the prime rate plus one point) and you generally have 15 years to pay back the money. Plus, the interest and principal you pay go back into your own account.
(The downside: If you leave your job, you have to pay back the remaining balance right away.)
Another option is to participate in a first-time home buyer program through the government or a private lender. These programs may enable you to buy a house while putting down as little as 2 percent to 3 percent.
These often place you in more debt, however. You’d be better served to simply wait another year, gather more funds together and THEN apply for a Florida home mortgage loan.
