If you are planning to save for a home this year I thought I'd share a little advice:
First it is a good idea to talk to a mortgage guy and go through the preapproval process before budgeting. Have them run some hypothetical numbers for you so you know roughly what you need to save for down payment and closing costs and what payments will look like.
Note here that it may make sense to put less down to buy a home sooner/ keep some savings on hand for an emergency fund. Everyone hates PMI but if you buy a home today and pay 5% interest rate and next year they are at 6% your effective rate with mortgage insurance will likely be below the 1% rate difference. And it comes off when you get to 20% equity. I'm not saying 6% in 2020. I do see many folks wait longer to buy a home than they should because they think they need to put 20% down. If the payment is comfortable with PMI and you love the house buy the house with less down. And if it is going to take x amount of time to get 20% down you should be able to pay the mortgage down in a similar amount of time and get the PMI removed. Everyone's situation is different and if the PMI pushes the payment too high for your budget obviously don't do this but PMI is just effectively a higher interest rate for putting less than 20% down. It isn't some terrible evil thing that must be avoided at all costs.
You also want to plan for moving expenses, the cost of an inspection, and any projects you plan to do to the new home.
And if you are working with a good mortgage guy/gal and your credit is below 760 ask him/her if he/she has any advice to improve the credit score while you save. Having even a slightly higher score can make a surprising difference on your mortgage payment.
Happy New Year!
Submitted January 01, 2019 at 08:48PM by MortgageGuy86 http://bit.ly/2RwF2vG
