Fannie Mae and Freddie Mac support mortgages with as little as 3% down. This is a significant drop from their previously supported 5% minimum down payment.
This will help low income and first time home owners be able buy a home. However, borrowers will still need to be required to meet strict criteria to qualify for the this type of mortgage. To qualify, buyers will need to have a minimum credit score of 620, offer detailed information on employment and assets, and attend home ownership counseling.
Further good news to buyers potentially interested in this type of loan, private mortgage insurance (PMI) will drop after the mortgage balance is less than 80%. In contrast, FHA loans require a minimum of 3.5% down and the PMI remains active for the life of the loan.
Ask your mortgage broker to see if you can qualify for this program. If you want recommendations, contact me bellow.
Finding extra money each month can be difficult. It may seem that when you are able to put money into your savings account one month, you end up needing it the next month. So, how can you go about saving for a new house? Here are some tips that could help make the process easier.
Sure, this seems obvious but this can be the best tool to help you save! Budget for every dollar you earn in a month and set an achievable savings goal. Then, just track the amount you spend to make sure you don't go over budget. If you stick to your budget, you will be able to put money away. I find that even if unexpected things come up or you don't stick to the budget perfectly, you will still save a lot more if you are trying to adhere to a budget.
Saving For Your First House?
If you are saving for your first house, I would recommend opening a money market account with an institution such as Vanguard. What you want to look for is an account that gives the best returns with the least amount of fees. Money market accounts won't give you amazing returns but they will give you more than most savings accounts. Also, if you want to take money out of your account, it can often take 2 days to post into your personal account. This can be helpful for savings as it may not feel as accessible.
It my also be helpful to figure out how much you will need to save. Let me know if you have questions.
Plan on Selling a House to Buy the New One?
If you already own a house and you are planning on selling it to buy another house, first check with me to see what the house would be worth in today's market. The lack of inventory has made housing prices go up over the past year. You may find that you are in a better position than you thought.
If you still need to save money, try paying off the mortgage as a form of savings. By doing this, you are guaranteed to save(gain) your interest rate. This is likely better than any other savings account or money market account you can find. Furthermore, the more you pay off of a mortgage, the more your monthly payment goes towards principal instead of interest.