You’re ready to buy a house and you’ve been saving for a down payment for months. You’ve slowly saved $8,000 and you’re ready to go to your closing! You hand the check over to the closer and get the keys to your new home. Finally, you’ve become a homeowner! A few weeks after moving into your new home, the fridge starts making a weird noise. You start thinking maybe a newer fridge would be a good idea. You get online to check your bank account and realize that besides your mortgage payment being due soon, you just dumped all of your savings into the down payment.
This is a common occurrence with first-time home buyers. Folks get so excited about moving into their first home that they forget to plan ahead. Being a homeowner has a lot of reoccurring costs associated with it and first-first-time homebuyers don’t really learn this until it’s too late and they are knee deep in repairs, upgrades, needed appliances and everything else that comes with being a homeowner.
Why you should use down payment assistance
Keep your down payment in the bank! The most important factor of being a successful homeowner is reserves. How much money somebody puts down is irrelative. It’s all about how much liquid assets and how much money they have in their savings account. A lack of savings is the number one reason that foreclosures happen. The same person that put 20% down is now going into foreclosure. That’s a bummer! If they had put that money away and utilized a down payment assistance program, they would be doing just fine.
Unfortunately, life has it’s obstacles and tough times could be just around the corner. Once someone puts money down on a house, it’s extremely difficult to pull that money out. It’s virtually impossible these days. On the other hand, folks that utilize a first-time buyer assistance program always have the option of making an additional principal payment if they run into some extra savings.
A lot of folks think that down payment assistance programs are just for those that don’t have any money but in reality it’s just a great financial tool for any future homebuyer. The general rule is to have 6 months reserves in savings. Meaning, if your mortgage payment is $1,000 per month, it’s suggested that you have $6,000 in savings.
Being a homeowner is a beautiful thing but it can quickly become a nightmare if someone is not prepared. Loss of a job is one of the biggest reasons folks lose their homes. Once a homeowner falls behind in payments, it can be extremely difficult to catch up so savings become very important in a situation like that. Just another reason to utilize a first-time buyer program!