BUDGETING FOR YOUR DREAM HOME!

Saving for your down payment.

By figuring out what you can comfortably afford means knowing the major things you need to budget for when you buy or build a home. From one-time expenses like the down payment to ongoing costs like taxes and insurance, here are some budgeting considerations and tips.

One of the main things you can do to prepare for home ownership is save money for a down payment. The more you can contribute (or �put down�), the more attractive you�ll be to your lender. In addition, you�ll borrow less, which means you�ll pay less in interest expenses over the life of your mortgage loan.

So how much of a down payment will you need? That depends on the purchase price of the home you would like to buy and your loan program. The down payment is a percentage of the home�s purchase price, and different loan programs require different minimum down payments. If you can put down at least 20% on a loan, you will not have to pay (PMI). If you can't put at least 20% down, ask your lender how much your monthly mortgage payment will be, including private mortgage insurance and determine whether this is a good option for you. Speaking with a mortgage professional about requirements to qualify for a home loan could help you figure out where you stand and set goals for your future.

There are several steps you can take to get your down payment savings started. Or if you�ve already begin saving, there may be ways to help grow your down payment faster.

Set up a down payment savings account

When you start saving for your down payment, it�s a good idea to keep your down payment fund separate from the rest of your spending money. If you are a TAD45 member, you can start saving for a down payment with the Build the dream plan (BTD) Plan. TAD45 enables you to set up, manage and track your down payment savings goals and progress.

Tip for Homebuyers:

If you will be paying more for a mortgage loan than you would in rent, one smart strategy to jump-start your down payment savings is to �do a try on� a potential total monthly mortgage payment: (1) work with your lender to estimate your projected payment (including mortgage principal interest taxes insurance, as well as any additional fees such as homeowners association dues); (2) then subtract what you are currently paying in rent from this amount; and (3) put the difference in a savings account every month. For example:

• Let�s say your projected mortgage payment is $1,850, and your projected increase in utilities is $300.
• Your current rent is $1,000.
• So the increase you would expect to pay as a homeowner is $850. That�s the amount you would put into your down payment savings account each month, to �try on� the payment.
• Or the TAD45 Option: $75.

Continue adding to your savings

There are several ways you can add small amounts to your savings account on a regular basis so that saving is part of your routine:

• Enroll in an auto-savings program, such as Keep the Change.
• Every time you get cash at an ATM, transfer a little to your down payment savings account.
• Have a predetermined amount automatically deposited every week or month from your checking account.
• Cut back on some luxuries and deposit what you would have spent (say, on a new shoe or an expensive meal) into your down payment savings account instead.
• A family member or other person may give you a monetary gift that can be used to cover a portion of your down payment-if you also have a signed letter explaining that the money is a gift and does not need to be repaid. There are limits to the amount that can be gifted.

Investments

As your down payment saving grows, you may opt to invest it in order to earn more interest. To help protect your savings from a loss in value, consider low-risk investments. Here are some good places to start:

Money market accounts: Set one up through your bank or other financial institution. They�re easy to set up and maintain, provide easy access to your money, and are insured by the FDIC up to $250,000.

Certificates of Deposit (CDs): If you plan on waiting a while to access your down payment savings, consider a CD. You should be able to get a higher rate of return than you would with a money market account. Find one with terms that fit your time frame, so you don�t get charged a penalty for early withdrawal. (See your financial Advisor)

Explore your loan options

Once you have an idea of how much you can save for a down payment, ask your lender which loan programs fit your situation. In addition to conventional loans, you may qualify for VA, or FHA which may only require 0 or a 3.5% down payment. However, FHA loan programs typically require you to pay both an upfront mortgage insurance premium (UFMIP) and a monthly mortgage insurance premium (MIP). You�ll need to factor these premiums in when you set your budget.

Home buyer tip: Ask your lender if they participate in down payment assistance programs and whether you may qualify.

Homeowners Get Rich and Renters Stay Poor!

Nothing you will ever do in your lifetime is likely to make you as much money as buying a home.

The average homeowner is more Richer than the average renter. The point here is if you�re renting, it�s time to stop. TAD45 can help you own your home FREE and CLEAR in 4-5 years regardless of credit or most Circumstances.  Renters aren�t bad people, in fact, my goal for you is to someday have you own some homes that you can rent to other people until they see the benefits of TAD45 system. If you are a renter yourself, we don�t want you to continue being one for much longer, you can�t get rich renting.

Remember, you can always use TAD45 Prepaid Acceleration System to buy, or Build Your Dream Home and still have it paid off in 4-5 years.

See How to Have Your Dream Home Build

By: TAD45

Dan Humphrey

We will see you at the top!