How to Save Cash for Your Home Purchase

Any first-time homebuyer will tell you that a house is more than just a place to live. It symbolizes independence and imparts a feeling of self-worth that almost no other possession can. Buying a home is one of the biggest milestones in a person's life, ranking right up there with getting your first job, marriage and starting a family. And, like these other life events, it can have its own emotional and financial challenges. When it comes to the financial part, you might be surprised to learn what obstacles you might face.

After you've gotten that first job out of college, you're probably just happy to have your own apartment and not be living in your parents' basement. You probably enjoy having a little extra income - and spending it.

Why You Need to Start Saving Today

Saving for a home might not be on your mind, but if you ever want to get out of an apartment it should be -especially in today's economy.

In 2009, housing prices are at the lowest they've been since the early 1990s. It's definitely a buyer's market, and people who never thought they could afford a home can now take advantage of low interest rates and a market flooded with foreclosure properties. The houses are there, tantalizingly within reach of the prospective first-time homebuyer.

The prices are right. But will you be able to get the mortgage that will get you into your first home?

Before the sub-prime mortgage disaster, just about anybody could qualify for a mortgage. Lenders even approved some people whose monthly income was barely enough to cover the mortgage payment and whose credit was sketchy to boot. Interest-only loans abounded; borrowers could get 100% financing. It's a different picture in the first half of 2009.

You Better Have Good Credit - Mortgages are Scarce!

Lending standards have been tightened drastically. No longer is 5% (or less!) a realistic figure for a down payment. In addition to going over your mortgage application with a fine-toothed comb, lenders will expect at least 10% down. This means that apartment dwellers should plan to sit tight and save until they've hit this savings mark and give serious consideration to their spending habits.

House prices are likely to stabilize and even recover, but it's unlikely that the credit crunch will end anytime soon or that banks will loosen up their lending standards. They've learned their lesson.

This means that as a first-time homebuyer, you may need to make some changes if you really want to get out of that apartment and into a house. You'll need to start saving more and may have to do it earlier than you planned.

You'll need every bit of credit you can muster, so you might want to reprioritize your needs - and, on top of that, differentiate between needs and wants. Unfortunately, delayed gratification will be the name of the game for many. If getting into a home is your ultimate goal, a healthy dose of lifestyle modification might be just what the doctor ordered.

So, what does this mean for the first-time homebuyers of the 2010s? Build your credit (or work to fix it), wait and watch when it comes to the housing market, and save, save SAVE! Prudent spending and responsible saving can help you build the down payment that you'll need to get into your first home.

If you feel you would like to begin the process of cleaning up your credit now (which is always a good idea!), think about giving Lexington Law a call for a free consultation.  Lexington Law's legal experts can help you get started on repairing your credit today - so you'll be ready when you find the house of your dreams!

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Email us if you have questions. We want you in your dream home too!

Ben_Casey@creditforcouples.com