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  • Writer's pictureRebecca Richardson - Mortgage Consultant

Follow These Tips to Buy on a Budget

It’s no secret that budgets are getting tight as inflation has approached high single digits recently. But that doesn’t necessarily mean that if you are looking to buy a home that you have to put that search on hold. If you are among those looking to buy now, use these 3 tips to help you buy on a budget.

How to buy when money is tight

You might wonder how you can buy a home when inflation is high and budgets are tight.

There are three ways you can still buy that dream home:

3: Use a down payment assistance program. There are several different programs available to you.

2: Get a gift from a family member - or a gift of equity - for your down payment and closing costs

1: Ask the seller to pay your closing costs

If you are thinking of using any of the above alternatives, it is important to do your homework. Check out more of my blogs for additional information.

Can I include closing costs in my loan?

Did you know that you’ll need between 2%-5% of a home’s sales price for closing costs?

If you haven’t budgeted for that expense, you might be wondering if your closing costs can be included in your loan.

In most cases you can’t but here’s a couple of things you can do instead:

1 - you can ask the seller to pay them for you

2 - you can have your mortgage company pay them for you

There are some important details you’ll want to know so be sure to reach out to me and my team to learn more.

What’s better? Lower sales price or seller-paid closing costs?

You probably think buying a home for less than it’s listed for is the best deal you can get.

I’ve got an option I bet you haven’t considered.

Plan 1:

  • Home listed for $400k & you offer $388k

  • With 5% down and a 6.375% rate/6.44% APR on a Conventional 30yr fixed loan and 740 FICO

  • The principal, interest and PMI portion of your payment would be: $2,514


Plan 2:

  • Offer full price at 400k & still put 5% down

  • Ask the seller for a credit of 12k to lower the rate and buy out the PMI

  • With 5.99% rate (6.161% APR) the principal, interest and PMI portion of your payment would be: Drum roll please (brrrrrrrrrrr) $2,276

That’s more than $230 of savings per month.

Which one would you choose? Want to know more about this and other mortgage strategies, get in touch and we can work the numbers together.

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