Michelle Gillespie - Keller Williams Realty



Posted by Michelle Gillespie on 3/4/2018

It can be difficult to find the extra savings to put towards your first home as a renter. With rent and utility prices rising, most people’s paychecks are leaving them with less and less savings at the end of the month.

Buying your first home, however, can be a great long-term financial decision. It will help you build equity, and, eventually, you’ll be able to use that equity toward another home or toward retiring.

In today’s post, we’ll talk about some of the ways to save for a down payment while renting an apartment.

How much to save

In order to make the most of your first home purchase, you’ll want to save up as much of a down payment as possible. This will help you receive the lowest interest rate and reduce the amount you’ll pay toward interest.

If you can manage to save 20% of the loan, you’ll also be able to waive private mortgage insurance (PMI), that would otherwise set you back around $100 per month or more.

Smart ways to save while renting

If you’re ready to get serious about saving for your first down payment, let’s talk about the best way to approach your savings plan.

Pay off small debts

If you’ve had that lingering credit card debt that you’ve never quite paid off, now is the time. Take a look at your current debts. Pay off the smaller balances first and focus on debt with the highest interest rate.

This will enable you to start making larger deposits toward your down payment savings sooner and can help you avoid needlessly paying interest on small loans and credit card debt.

Open a dedicated account or CD

The best way to make sure you contribute to your down payment savings plan is to open a savings account or take out a CD (certificate of deposit).

A savings account with a high-interest return is a good option for people who are worried that they may need to access their funds before they’re ready to buy a home.

If you’re comfortable with not being able to access your funds until a set date, then a CD could help you save more money.

Since CDs are a one-time payment, many people choose to combine both CDs and high-interest savings accounts to achieve their savings goals.

Regardless of which option you choose, be sure to shop around for the highest interest rate. Online banks tend to have higher rates than traditional banks and are also easy to sign up for.

Direct deposit a portion of your pay

Opening a bank account or CD won’t do you any good if you don’t commit to contributing to it. If you are paid via direct deposit, visit your HR office and ask them to reassign a portion of your weekly pay to your new account.

By following these tips, you’ll be able to better prepare for your down payment. Don’t  wait! The sooner you start saving, the sooner you’ll be able to purchase your first home.





Posted by Michelle Gillespie on 9/24/2017

You may have heard that you will need 20 percent of the purchase price of a home to put down in order to buy it. As the prices of homes continue to rise. 20 percent of the purchase price of any home may not seem like a small feat to save up. It’s not impossible to buy a home. You may be able to get around the 20 percent rule in a variety of ways. Keep in mind that putting down as large of a down payment as you can will help you to land the home of your dreams a bit faster. 


The 20 percent down rule is sort of a myth. While the more you have saved up, the better your chances of standing out among other buyers are. You can still get a mortgage with less than 20 percent down from most banks. The drawback in not putting down 20 percent on a home is that you will need mortgage insurance (also known as PMI). Mortgage insurance is necessary if you put less than 20 percent down because the lender wants protection in case the home is foreclosed on due to a lack of payments.


All About PMI Payments


If you do put less than 20 percent down on a home, your PMI payments won’t go on forever. Once your loan is paid down a bit, you’ll be free and clear of PMI payments. As a rule, if the loan-to-value-ratio reaches 80 percent, you can ask your lender to cancel the insurance for you. When the loan-to-value ratio reaches 78 percent, the lender will automatically cancel the PMI. This is a welcome decrease in expenses since PMI insurance can add up to be hundreds of dollars per month.      


Finding A Way Around 20 Percent Down


Before you even decide to buy a house, you should look at financing options. There are certain programs that are available to you to help. If you know about them ahead of time, you’ll be able to take advantage of them.  


Government Programs


Many different government agencies have programs available to help people get a home easier. These programs will provide home loans with a low interest rate and little to no down payment. The downside to these programs is that many of them actually require you to purchase private mortgage insurance as a contingency to get the loan. You’ll need to plan for these extra expenses. There are even grants available to help you with your down payment. Check in your state or local HUD office for details on various programs that can assist you with your down payment on your first home. Through a bit of savings and research, owning your first home can be possible with or without 20 percent down.




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Posted by Michelle Gillespie on 6/18/2017

Purchasing a home is a sign of new financial responsibility for many people. The leap into homeownership is a big and important step. Finding a home and securing a mortgage isn’t easy. Getting ready to take on a mortgage can require a lot of research and education on your part. Before you get too confused, you’ll need to learn the basics of a mortgage and what you should know before you apply. 


Be Prepared


This is probably the best advice for any first time homebuyer. Find some good lenders in your area. You can sit down with a lender and talk about your goals. The bank will be able to explain all of the costs and fees associated with buying a home ahead of time. This way, you’ll know exactly what to expect when you head into a purchase contract without any surprises. 


What’s Involved In A Loan? 


Each mortgage is a different situation. This is why meeting with a lender ahead of time is a good idea. Your real estate agent can suggest a mortgage lender if you don’t have one in mind. No one will be happier for you than your real estate agent if you have a smooth real estate transaction. You’ll be able to walk through the mortgage process step by step with a loan officer and understand the specifics of your own scenario.


What You’ll Need For A Mortgage


There’s a few things that you’ll need to have ready before you can even begin searching for a home. 


Cash For A Down Payment


You’ll need to save up a bit of cash before you know that you’re ready to buy a home. It’s recommended that you have at least 20 percent of the purchase price of a home to put down towards your loan initially.   



A Good Working Knowledge Of Personal Finances


You should have an understanding of your own finances in order to buy a home. Not only will this help you save, but it will help you to ensure that you’re not going to overextend yourself financially after you secure the mortgage. To get your finances in order, honestly record all of your monthly expenses and spending habits, so you know exactly what you can afford.   


The Price Range Of Homes You’re Interested In 


If you have an idea of what kind of home you’d like, it will make your entire house shopping experience a lot easier. You’ll be able to see exactly what you can afford and how much you need to save. When your wish list equates to half-million dollar homes, and you find that you can only afford around $300,000, you don’t need to go into shock! It’s good to have an idea of how much house you can afford and what it will get you. When you do a little homework, you’ll discover that buying a home isn’t such a hard process when you’re prepared!





Posted by Michelle Gillespie on 9/4/2016

Put a mortgage down payment of 20% or more toward the purchase of a new home and you could lower your monthly loan installments by at least $100. A sizable down payment could also position you as a smart risk to lenders. If you're mortgage is approved, you could yield another reward, less interest to pay over the life of your loan. But, how do you get there, especially when you consider your other financial responsibilities, expenses like student loans, credit card bills and insurance. Fortunately, there are actions that you can take to start building money to put toward a down payment on a new home. Make a Decision and Stick To It Decide how much you want to save for your mortgage down payment. Give yourself enough time to build your savings. For example, if you want to put $10,000 toward your down payment, consider giving yourself two to three years to reach your goal. If you're downsizing, money from the sale of your current home could go toward the down payment on your new home. There are online budget templates that you can use to track your current spending. It’s also good to get in the habit of reviewing your monthly bank statement. Not only can this alert you to erroneous charges on your account, it can open your eyes to how much money you could be saving. If you’re still living with your parents, take an honest look at your spending habits. How much money do you spend on restaurant food, clothes, shoes, concert tickets and other entertainment? At first glance, you might think that you only spend $100 a month on entertainment, when you could actually be spending $250 a month. Let your parents know that you're putting money away for a mortgage down payment. They might lower your rent to help you save. Should you be living on your own, consider taking in a roommate to split your rent. Use the other half of the money that you formerly put toward your rent to save for your mortgage down payment. Other ways to save a mortgage down payment are: • Work a part-time job and deposit those earnings into an interest bearing account. Use your skills to telecommute. For example, you could work as a web page designer, computer programmer, freelance writer, virtual instructor or virtual assistant from home. • Put job bonuses and other incentive pay toward your down payment. • Deposit tax refunds in your interest bearing account. • Combine insurance plans and place the savings in your interest bearing account. • Take advantage of cable, telephone and internet service provider discounts, placing the savings toward your down payment. • Rent out a portion of your home and put the rent toward a down payment on a new home. • Use coupons when grocery shopping. Go to the grocery store on double coupon days and you could save $30 or more a week. • Limit unnecessary spending until you reach your mortgage down payment goal. • Set your thermostat to 65. During summer months, get outdoors to avoid keeping the air conditioner on for hours at a time. During winter months, consider using a sweater. • Sell furniture that you are not using. For example, you could hold a yard sale and deposit proceeds from the yard sale in your savings account. • Until you reach your mortgage down payment goal, consider taking day trips rather than vacationing overseas or on long out-of-town stays that require you to take on airline, hotel and rental car expenses. Stick to your plan. Doing so, could yield you thousands of dollars in savings during house buying negotiations and over the lifetime of your mortgage. Sticking to your savings plan could also strengthen your money management skills, so that you avoid debt and continue to build equity long after you move into your new home.




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