2017 is officially here, and it’s a great time to make that house you’ve been dreaming of owning officially yours before the year’s end. It’s possible - after a little financial education and with Telcoe by your side to help you through the process of becoming a homeowner.
With the spring months ahead, you’ll see homes hitting the market every day as the weather begins to warm and families anticipate making their move at the end of the school year. This is a fantastic time to be both a buyer and and seller, and in most situations, sellers are buyers, too. What’s more is that interest rates are expected to rise in the near future, and most buyers will want to lock down that 30 year fixed mortgage while they still can. The biggest question before you get started, however, is this:
Is now the time to buy?
Especially if you’re a first-time homebuyer, you may not be fully aware of how much money that you’ll really need to purchase your new home. By the time you take into consideration the closing costs, interest rate, taxes, necessary improvements, moving expenses, your down payment, and the like, you’ll quickly discover that you may need far more in savings that you originally anticipated. But if you’ve planned ahead and have a nice cushion to get you through the process, now is the time to lock in that fixed mortgage before interest rates begin to spike. What’s a truly comfortable figure? Have at least 6 full months’ worth of living expenses set aside in addition to your down payment.
The personal finance blog, Jiu-Jitsu Finance, recently did the math:
Take the following facts for a $400,000 house:
- Total pre-mortgage monthly household expenses = $3,000
- Minimum down payment (first-time homebuyer) = $14,000
- Mortgage (with $8,000 tax bill included) = $2,900 (estimate)
You’ll need around $50,000 cash to comfortably buy this house.
$3,000 + $2,900 = $5,900 x 6 months = $35,400 + $14,000 = $49,400 (rounded up to $50,000)
Though it may be a difficult figure to accept, it’s certainly a safe one. This is particularly true for individuals or families who may be moving due to a new job, as a gap in income is often common during this time of transition. If you find that you don’t need your savings, you can always set it aside for later or invest in something you really want for your new home.
So, what about that down payment? As a general rule, the more, the merrier. One of our mortgage loan specialists can assist you in determining exactly what you’ll really need to make your dream of homeownership a reality.
We want to educate our members on their finances and help them plan their futures. This is why financial literacy is of the utmost importance to all of us here at Telcoe Federal Credit Union. Educational services are something you’ll rarely find at a bank that’s actually very common for credit unions. To learn more about a few of the money management tools we offer our members and other educational resources, click HERE.
Looking for a local mortgage loan from your choice of credit unions in Little Rock, Sherwood, or Russellville? We’ve got one here at Telcoe. Want to learn more about our local credit union or have questions about our services, including low rate credit cards, free checking accounts, or auto loans? Visit us online at www.telcoe.com!