First time home buyers in Las Vegas take nearly eight years on How to save for a down payment for their dream home. The time frame is derived by factoring in the amount a renter pays for housing in Nevada and the required 10% down payment.
Another study by Realty Trac shows that it takes an average of 12.5 years for a new buyer in Las Vegas to save for a 20% down payment. The study is based on a personal saving rate of 5.6% and the current median home price. Given that most first time home buyers in Las Vegas are young adults with earnings below the national median salary, they would have to wait until they are 42 to afford a home.
However, the same savings can be made within two years in the Freddie Mac and Fannie Mae 3% down payment plan. Under this program, it takes buyers in states such as Nevada as little as two years to save for the down payment. The Freddie and Fannie plan is geared towards enabling first-time home buyers and low-income borrowers with little savings to afford the down payment.
To qualify for this program, you’ll need a credit rating of at least 620 and offer a full documentation of your assets, income, and job status. Also, the prospective first time home buyers must participate in borrower education programs and have a private mortgage insurance plan to qualify for the loan. A buyer can take advantage of the Home Possible Advantage plan provided that the co-borrower is a new buyer. For more information on the Freddie Mac and Fannie Mae Home Possible Advantage Plan, we recommend our Preferred Partners: Residential Lenders. These lenders know a lot about this program and many of the other buyer assistance opportunities in the market today.
First Time Home Buyers: How a real estate agent can help
With the assistance of a real estate agent, first time home buyers can negotiate to have the seller fully or partly cover the closing costs. Given their years of experience in the market, the real estate agents can identify hidden costs and advise on the best options for home financing.
Here are some of the ways first time home buyers can boost their down payment savings.
Clear the credit card debt first time home buyers
For first time home buyers with credit card debt, making monthly interest payments on the debt and setting aside some funds for the down payment can be a hassle. Clearing any credit card debts will enable you to increase your saving portion and reduce the amount of time it takes to make the down payment. Also, consider the basic math. If you are carrying credit card debt at an 18% annual interest rate and your savings account is earning you 2% – you are falling 16% behind on your debt annually. Credit card debt should be reduced to zero.
Squeeze your budget first time home buyers
Keeping track of your spending habits will enable you to minimize unnecessary spending and increase your savings. With a goal in your mind, you will be able to track your finances and increase the down payment savings. One really easy example – coffee. If you spend $5 per day on coffee at your favorite drive-thru that’s $35 per week, $1,820 per month, and $21,840 per year. One year of making your coffee at home vs. owning your own home… Seems an easy decision when you consider the numbers. Squeeze the “nice to have” out of your monthly budget because you will likely think “nice to have my home” once you are living in it.
Consider a tax free saving account
A tax-free saving account will enable you to enjoy tax benefits on your down payment savings, you’ll then be able to make payments within the shortest time. A consultation with a financial advisor will enable you to identify the best saving account for your down payment plan.
Be aware of your priorities
Being aware of your priorities means being able to forego instant gratification for a more satisfying future reward. Saving for a down payment will require you to cut spending on your wants. If you are used to expensive vacations, you have to let them go to be able to save for your down payment. Even under the Fannie and Freddie Home Possible Advantage plan, you will still need to make sacrifices to be able to service your loan.
Save automatically
Creating an automatic saving account will ensure that you do not spend your down payment savings on other things. With an automatic saving account, a portion of your direct deposits will automatically be transferred to your saving account without missing.
Final thoughts?
With proper planning and consultation, first time home buyers will be able to maximize their opportunity and make down payments within the shortest time possible. Learning about the different ways to boost your savings and getting professional help from a real estate agent, will enable you to attain your dream home within the shortest time possible. Before you jump into a home buying program, always ensure that you have enough information about the deal and other offers in the market.
Thank you for reading our post, “How to save for a down payment.” For more Las Vegas home Buyer tips, information on moving to Las Vegas, Las Vegas real estate market news, information on Las Vegas homes for sale, buying a home in Las Vegas, or general real estate information please visit our website www.lasvegasrealestate.com.