Articles Tagged "Down Payment"

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Buying a Home in Augusta? Here's How to Apply for a Mortgage

Mortgage Application Tips
Do the words "mortgage application" send a chill up and down your spine? It's an understandable reaction, considering the financial and emotional investment that goes into the purchase of a home in Augusta County.

Fortunately, applying for a mortgage doesn't have to be so stress-inducing. Preparation is the key, as our real estate agents share their top tips that pave the way to a streamlined mortgage application process.

  1. Polish Your Credit Score
    Mortgage lenders have a lot to lose on bad decisions, and your credit score is the best indicator they have regarding your financial responsibility. Request free copies of your credit reports from all three major agencies and clean up any inaccuracies.  Credit utilization ratio accounts for one-third of your total score, so devise a plan to pay down open balances as soon as possible.

  2. Know Your Limit
    If you fall in love with a house that's beyond your means, emotion may fool you into believing you can come up with the extra money. But reality hits hard and fast, and you might find yourself sinking under the weight of monthly payments. The industry standard is the 28/36 rule, which dictates that housing costs should be no more than 28 percent of gross monthly income while total debt payment should not exceed 36 percent.

  3. Determine a Down Payment Amount
    While it can be difficult to come up with ready cash for a sizable down payment, the advantages are worth it. Monthly payments will be lower, especially if you put enough down to avoid private mortgage insurance (PMI).  In addition, the smaller the down payment, the more vulnerable home equity is to sudden changes in real estate values.

  4. Research Options
    The good news AND the bad news is that there's no shortage of lenders, types of mortgages and rates. Fixed or adjustable rate? 15-year or 30-year? Government-backed or conventional? First-time home buyer program? It means putting in some serious study time, but there's enough variety to offer solutions for nearly every home buyer's individual situation.

  5. Collect Documents 
    There may be slight variations, but here's a list of the principal documents required by most lenders:

    - Recent paycheck stubs and bank statements
    - Last year's tax returns, including your most recent W2
    - Rent history, if applicable
    - A complete list of assets and debts
    - Divorce decree and bankruptcy discharge papers, if applicable

    If you're self-employed, documents such as tax returns, 1099 forms, and profit-and-loss statement can serve as proof of income.

  6. Get Pre-Approved
    While pre-approval doesn't guarantee a mortgage, it indicates that a lender has reviewed your qualifications and found that you meet their standards for a loan. A pre-approval letter can also mean the difference in having an offer accepted over a buyer without pre-approval.

  7. Read the Fine Print
    Imagine the shock and discouragement you would feel when you learn extra payments actually cost you more due to prepayment penalties. No one enjoys wading through legal documents, but when it comes to mortgages you literally can't afford any surprises. 

When you're ready to view Augusta County homes for sale, our friendly and experienced real estate agents can help you every step of the way. Contact Old Dominion Realty and get ready to make your dream home a reality.


7 Super Smart Ways to Save for a Down Payment

A Larger Down Payment Can Save You Money in the Long Run

Save for a Down Payment
Is buying a house on your bucket list? Saving for a down payment is an important first step. When you make a substantial down payment, it lets you save on your mortgage financing. The larger your down payment, the sooner you'll be able to pay off your home loan.

Most financing arrangements require at least a small down payment when buying a house. It is not unusual for down payments to range anywhere from two to ten percent of the home's appraised value. That can be a lot of money, so planning is essential.

Our real estate agents have created this list to increase your odds for success:

  1. Start With Your Goal in Mind
    If you don't have a clear goal to start with, odds are good you'll never reach it! There are two big factors you need to figure out first: How much you need to save and when you need it. These are the big factors that will help you determine how aggressive your saving needs to be. Of course, it never hurts to have savings, so don't be afraid to challenge yourself.
  2. Set a Budget
    Many people have a general budget, but don't pay very close attention to it. When you are saving for a major purchase such as a home, it's essential to start with a sound budget you can consult every week. The simple act of writing down how much you spend in each expense category will help you find ways to save more money. Even putting aside $100 a month will help.
  3. Use Automated Savings
    A payroll savings plan is the best way to consistently save for a big purchase. It will help you make sure you are constantly banking a certain amount. Allocate a percentage of your pay to go directly toward your savings goal. You'll be less tempted to use the money for other things, and you'll know approximately when you will reach certain savings milestones.
  4. Small Savings Count, Too
    You can save money and thus move more into your savings – by finding ways to save a little bit more each day. For example, many banks offer a savings plan where they "round up" each small transaction and put the remainder in savings. You should also look at financial instruments such as credit cards and checking accounts. Are you losing money to fees?
  5. Bank Any Unexpected Cash
    Every now and then, the average person runs into a little extra money. Tax returns are the biggest and most predictable example, but there may be others. Be sure to bank these rather than using them right away. Be proactive in looking for ways to create your own windfalls: For example, selling unwanted things in a yard sale or on eBay can net several hundred dollars in a day.
  6. Add Income if You Can
    The internet offers thousands of ways to add a little additional income to your bottom line each month. Of course, you shouldn't be working 80-hour days to make your down payment – you'll just end up burnt out. After all, your "savings" budget is your future "household" budget, too! Still, you may be able to add a few hundred in just a couple of hours each weekend. It's worth it.
  7. Celebrate Your Milestones
    Saving up for a long period of time can seem abstract and tiring. Look over your local real estate listings from time to time to remember what it's all for: Buying a house!

Thinking about buying a home in Harrisonburg, Staunton, or Moorefield? Contact Old Dominion Realty for personalized help and advice from our team of local real estate experts.

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