How much house can I afford to buy? How much down payment do I need?

GOOD MORNING FUTURE HOMEOWNERS! I’m glad you could join me today

Welcome to www.yourrealestateacademy.com

Where you will discover everything you ever wanted to know about real estate but were afraid to ask. Here is the place to ask questions and learn everything you need to become an educated real estate investor because owning your own home is an investment in your family wealth.

My name is Debbie McGrann. I am a real estate agent in Maryland and team leader of the Reap Advantage Team serving all 50 states. I created Your Real Estate Academy in order for potential home buyers to have a convenient central location with all the information available to you on your schedule.

My purpose is to teach you the home buying process step by step so you will start your home search with knowledge and confidence. I will have information available for you to download and review.

I have prepared a series of online lessons about the home buying process.

Today’s question is:

How much can I afford to spend on my new home?

This is a very important question, and you should find this out as soon as you start to dream about owning your own home.  I have many trusted lenders as part of my team that would be honored to discuss this with you and design a homeownership plan for you. The lender will ask you questions about your income and your debts. Together you will determine how much monthly payment you are comfortable with.  Sometimes, potential buyers are not comfortable spending to the top of their budget- they do not want to be house poor. I totally agree with this goal unless it is holding you back from buying at all. Once you determine the amount of your loan, then you will know how much money you need for your down payment and additional costs.

How much down payment do I need?

Probably not as much as you think! This is the most misunderstood part of the home buying process.

My team and I always ask this question to potential new buyers. Overwhelming they answer 20%.  This is a myth and it makes people think they can never afford to buy a home.

Just last week, I was meeting with a couple for a buyer consultation. They told me they had been told by friends and family that they must have a 20% down payment. Not true! They were relieved to hear that they would not be required to have a 20% down payment, they would only need 3.5%!  In their case, they are preapproved for a loan amount of $400,000. 20% down would mean they need $80,000. 3.5% is only $14,000. That is a huge difference! It means they will not have to put off buying their first house until the can save that much money. They will be able to reach their dream of homeownership much sooner and start building wealth for their family.

A large down payment is not always needed for your home purchase. In fact, there are programs that require NO down payment.

USDA

Veteran Loans

Where do I get enough money to buy my first home?

As soon as you have your goal of home ownership and you know how much you can afford, you will know how much money you need for the down payment and additional closing costs. Then you begin to accumulate these funds. Down payments can be intimidating for many potential buyers. Do not let this be a barrier for you reaching your goal of homeownership. How are other new homeowners doing it?

Put that goal front and center of your day. If you need $10,000 for your down payment, make a sign with $10,000, put it somewhere where you will see it every day. That way you will move toward that goal and make it happen.

10 creative ideas to fund your down payment

1.Your personal savings. For success, start early

2. Forgotten assets. Do you have items you can sell? Clothes, shoes, games, crafts, etc.

3. Part time work or overtime

4. Your retirement account. Many employers allow withdrawals for a home purchase

5. Your employer may have special benefits for purchasing your first home such as matching some of your savings- contact your benefits office

6. Turn the special events of your life into a crowdfunding campaign. Graduations, weddings, birthdays, birth of a child, saving for your first home, are opportunities to reach out to your family and friends to help fund your down payment.

**HoneyFund is a popular fundraising site (www.honeyfund.com)

7. Government down payment assistance programs

Top 5 Down Payment Assistance Myths

Myth #1: You need 20% down to buy a home. No you don’t you may need 0 down or 3.5%

Myth #2: Down payment help is only for first-time homebuyers. Not necessarily. HUD defines a first time home buyer as someone who has not owned a home in 3 years. In addition, many down payment assistance programs are available for repeat homebuyers

Myth #3: Down payment programs aren’t available in my area. Down payment programs are available in every market across the country. My team of experienced agents and lenders will know about these programs

Myth #4: It’s too expensive to buy a home in my market. There are programs that offer incentives and even specific programs for community service workers, including educators, police officers, firefighters and healthcare workers. There are additional benefits for veterans, members of the military and surviving spouses. Some programs allow buyers to purchase a multi-family property as long as the buyer occupies one of the units, which allows the homeowner to earn income from their rental units to help pay the mortgage.

Myth #5: Down payment programs make home financing more difficult. Not true. Our team has lender partners who are very familiar with these down payment assistance programs and can assure sellers that the buyers are well qualified.

8. Loans from family or friends

9. If you’re expecting a tax refund this year, it could bring you closer to your goal of homeownership.

10. Cut back on your current expenses. Something as simple as cheaper coffee and eating at home will save you more than you think. When you have the goal of home ownership it will be worth it!

Bottom Line. After reviewing the creative ideas and getting advice from me and your lender, maybe saving for a down payment isn’t that hard after all. You can reach your dream of homeownership quicker than you may have thought and start building wealth for your family.

Thank you for joining me today. I hope you found this class helpful. If you have any questions or suggestions, please contact me, my team and I would be honored to help

My goal for this year is to help 100 families become homeowners and get them started on building their family wealth!  Are you ready to one of my buyers?

Let’s get started today on your home ownership plan. Go on our website, Your Real Estate Academy. com and download all the free information I have for you. The videos are there for you to watch on your schedule. If you have any questions or suggestions, please submit them to me so I can help you.

If you are ready to start your home search, please call me for a buyer’s consultation and let’s get you started building wealth for your family through home ownership!  I look forward to hearing from you soon.