Down payment savings solutions Page 1
Saving for a down payment: A New Year s Resolution you can keep Flagstar Bank is committed to helping you reach your financial goals. If one of them is a saving for a down payment on a home, our mortgage experts can offer advice and proven strategies to help you get there. Then when you re ready to buy, we can recommend the best financing solution to address your needs. Flagstar Bank is leader in mortgage lending with a wide variety of fixed- and adjustablerate mortgages with terms to fit your budget. SOLD Page 2
The more you save, the better Saving for a down payment is the first step in buying the home you want. With home prices climbing, it s become more common for buyers to put a bare minimum down. But, a larger down payment offers greater financial advantages and helps put you on the path to financial independence. Let s run through some of the benefits: Lower Payments We ll start with the most obvious. The more money you put down, the smaller your loan will be. You ll have more equity in your home to begin with, and every month you ll reap the rewards of your savings with lower monthly payments. Better rate While a mortgage loan is based on a variety of factors, one of the most important is the amount you choose to put down. A larger down payment can often make you eligible for a better rate. This is because there s less risk for the lender. If you make a smaller down payment, the lender assumes more risk, and the rate will most likely be adjusted upward accordingly. Avoid mortgage insurance If you put down less than 20%, mortgage lenders will require that private mortgage insurance (PMI) be added to your monthly payment. This could result in a substantial increase to your payment that doesn t necessarily go towards paying down your loan. Speak to a Flagstar Loan Officer to review all of the options that are available to you and best fit your budget and goals. Figuring it Out Use the Flagstar Bank Mortgage Calculator to run a variety of loan scenarios to determine which best suits your needs. Bottom line; don t let the down payment decision scare you. Page 3
Other costs to be prepared for The down payment itself isn t the only thing you need to save for when buying a house. Expenses can start piling up before you know it. Let s discuss the other costs that come with purchasing a home so you can financially prepare for them. Homeowner s insurance Not to be confused with PMI, homeowner s insurance is oftentimes required by the lender and shouldn t be overlooked. To make it more affordable, buyers will escrow homeowner s insurance by rolling it into their monthly payments. This helps to spread the cost out over the year. Closing Costs Your lender often imposes costs related to a mortgage as early as the application date. Closing costs can include an application fee, appraisal fee, survey, title search, inspection and origination fees just to name a few. Some experts suggest that buyers, depending on their situation, should be prepared to pay anywhere from two to five percent of a home s sales price in fees at the closing table. HOA fees and property taxes Every neighborhood and city is different. You may have a Homeowner s Association (HOA) Fee that the neighborhood assesses to maintain and improve common areas or to fund neighborhood activities. You should also look into the property taxes. Evaluating these fixed costs will help provide a complete picture of expenses. If you are working with a Realtor, they should be able to provide a current estimate of these ongoing costs. Page 4
Other costs to be prepared for (cont d) Moving costs Of course, expenses don t end at closing. Depending on how much furniture you already have, and how far you re moving, just getting into your new home can be a significant expense. You should contact a couple different companies to get an accurate estimate. Furnishing your home A new home invariably means that you will need to buy new things. Everything from furniture, accessories, window coverings and appliances will have an impact on your budget. Give some thought to what you ll need to buy immediately to make your new home more livable. Necessary improvements & repairs In a perfect world, everything runs smoothly from the day you move in. But that s not always the case. It s a good idea to have a nest egg to cover unplanned repairs that are inevitable with home ownership. Page 5
Ways to save With planning and discipline, you can reach your down payment goal. Here are a few strategies to help: Create a budget When you have a large savings goal, it requires making some real lifestyle changes. Setting budgetary goals for certain categories like dining out or personal expenses can help you stay on track. Take a look at recurring expenses there may be services you re not even using anymore. Pay off credit cards Ever-accumulating interest charges mean your money is going to credit card companies and not toward your goals. Prioritize your debts by paying off the ones with the highest-interest rate first. Once your balances are paid off, all the money that was going toward interest can now be put into your savings account. Look for ways to increase income You already have a job, but could you add a second job for a short time to add to savings? Every little bit helps, and having a goal in mind can be very motivating. And, don t forget to sell those unwanted items. They could bring in some extra cash and save the expense of moving them. Save your tax refund If you get a tax refund, it may feel like bonus money. But, by putting it all toward your down payment, it will feel like bonus savings. Page 6
Flagstar Gift Program Unique to Flagstar Bank, the Gift Program allows you to move into your new home with almost no down payment if you qualify. This program is available in CRA assessment areas only, and it is only applicable to primary residences within Michigan. One of our Loan Officers will be able to answer any questions you have or see what down payment assistance programs might be available in your area. Page 7
Conclusion It s always wise to save as much as possible before buying a home. Flagstar Bank can help in this critically important task. Talking with a Flagstar Loan Officer first helps you establish a plan to meet your savings and timing goals. When you re ready to move forward with your home buying plans, we have a number of loan programs that are designed to address every situation. We look forward to helping you make your goals a reality. flagstar.com/locations Page 8