All you need to know about saving your Down Payment for Home!
Thinking about buying a house within the next 3 years? Or a bit farther down the road? Timing is everything and it turns out that simple question makes a difference.
According to Zillow, the median home value in Diamond Bar is $697,000. So how much of that should you put down? Down payments vary depending on the loan type, but in general they are:
*0% for VA loans
*3.5% for FHA loans
*20% for conventional loans
*Or use this handy down payment calculator to help you.
20% is the recommended down payment on a house.
You may have heard this before, but we’ll say it again. Try to put at least 20% down. Why? If you finance more than 80% of the home value, you will have to pay Private Mortgage Insurance (PMI). (But if you can take out a VA loan, PMI is not required.)
When are you looking to purchase a home?
If you’re looking to buy sooner rather than later, consider keeping your money in a cash account, like a savings account or something similar. Remember that savings accounts will yield greater interest than a regular checking account. You don’t want to invest this money for such a short period because of market volatility. Just think:
Imagine you’ve built up a decent amount for a down payment and you invested this money in the stock market. A recession comes and you take a 30% hit on your balance. That will likely prevent you from buying your home within your three-year goal.
If you’re not in a big rush, investing in the market might be a better option for you. Should you invest, do so with caution and don’t be too aggressive. Be smart, calculated, and balanced with your portfolio picks. Make sure you have a healthy mix of stocks and bonds. And keep in mind that you’ll want to rebalance your portfolio at least once a year. Why?
Imagine that you have a portfolio of 10 different stock and bond ETFs, or Exchange-traded funds. Each ETF is invested at a fixed percentage of your overall portfolio. As the year goes on, the allocations will wander from their targets. Those doing well will become a larger part of your portfolio. Those not doing so well will become a smaller part of your portfolio. When you rebalance, you bring things back in line with your target percentages, so you’re selling high and buying low.
If these investing ideas are a bit daunting to you, you’re not alone! Speak with a financial planner to help you evaluate your options and navigate these uncertain waters. An advisor can be just the direction you need to reach your goal and buy a house.
Search all RVA homes here: https://www.thervagroup.
Original Article: https://realtytimes.com/consumeradvice/buyersadvice/item/1015682-20180307-want-to-buy-a-house-heres-how-to-save-for-a-down-payment?rtmpage=null