So many people want to buy their first home in this buyers market, but it's difficult for most because they don't have the money for a down payment. The time that's required to gather together the money needed for a down payment may seem like a daunting task considering it may take several years to make their dream happen, but they should understand that they are working on the long term of owning a home. However, many of these people who are in this type of situation are trying to figure out just how they can prepare for what will become the largest purchase they will ever make.
Believe it or not, buying a home is not that difficult but it does require people to be in the correct financial situation in order to make this dream come true. Many ask how they can get to this correct financial situation when bills, food and other living expenses need to be handled on a monthly basis.
There are simple ways they can transition from a renter to a home owner and the first step is for them to get an overall picture of their financial situation. It's important to know what lenders are looking for before they apply for a loan. In turn, they will have a better chance of receiving a loan and it will be more beneficial for you, the agent, when you begin to work with them. This will be a big time-saver for all parties involved because time won't be wasted looking at homes that are not in their price range and furthermore, they will have a better understanding of what they can truly afford and focus on the most suitable home they can find.
They need to take a very close look at their budget. If they don't have a budget then they need to develop one. Currently, there are many different software programs on the market that can help them create a budget, or they can begin by simply developing a basic spreadsheet.
They should track their monthly income and expenses to help them create a better thumb print of their financial situation. Also, now is the time to review their credit history. As they look at their credit report, they should be able to see if there are any errors or notations of late payments that may give them a negative affect on their credit score. This is the time for them to dispute any errors and begin the work cleaning up their credit before applying for a home loan.
One thing that they can do is rearrange their money. They shouldn't think of it as cutting back, but just moving money from one area to another. For example, if they are spending $10 on lunch five days a week, then they should try bringing their lunch to work and putting that $50 a week into an account that they will use to save for the down payment on their future home. There alone is a savings of $2500 a year and that's just one example.
Another area that they can rearrange their money is by examining their insurance policies and consider raising their deductibles. By doing this they can actually save money and move the saved money into the account for their down payment fund. Overall statistics have shown that the average person only files a claim once every 13 years and by just changing their deductable from $500 to $1000 this can save them 10 to 15 percent annually. Also, if they can, it's recommended that they pay their premium in full because sometimes insurance companies offer discounts by doing so and they can also avoid being charged administrative fees throughout the billing cycle.
It is realized that we live in a society of instant gratification but by delaying this instant gratification the reward will be well worth the efforts and difficulties of change. By staying focused and keeping a keen eye on their budget, they will be able to save for the down payment on the home of their dreams and when they do they should enjoy it. After all, they earned it.