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Purchasing a home

Purchasing a home is one of the most significant things a person does in their lifetime. The decision to purchase a home depends a lot on individual factors and where you’re at financially. But how do you get started? And how to you know when (or if) home ownership is right for you?

  • Down payments explained
    • For many, finding the down payment is the most difficult element in purchasing a home. How much do you really need?
    • Example: home price is $300,000. Many lenders will loan up to 90% of the sale price. In this example, you would need to come up with 10% or $30,000.
    • However, most lenders require private mortgage insurance (PMI) on any loan where the property owner doesn't have at least 20 percent equity in the property. It is an insurance program that protects the lender and allows them to offer lower down payment loans.
  • Sources of loans
    • VA Loans. Veterans Administration loans are designed to help service people and veterans obtain financing at very reasonable rates. They don't require a down payment or mortgage insurance. These loans are backed by the federal government. These are probably the very best loans available. Visit the Veterans Administration website.
    • FHA. The Federal Housing Administration was created to help middle- to lower-income buyers secure home loans. The FHA doesn't actually lend the money; instead, it insures the loan. The FHA requires only a 3.5 percent down payment. There are guidelines, and the buyer's credit is important to meeting these requirements. Visit
    • Fannie Mae and Freddie Mac. These federally chartered programs offer loans for 3 percent down. They either own the loan or guarantee it. A buyer must meet certain criteria. Visit
    • Other Options. There are private lenders that have programs not requiring the full down payment, but these generally have much higher requirements and higher interest rates. Granite Wealth can help put you in contact with professionals who might be able to assist you.
  • Interest rates explained
    • Fixed rates are just that – fixed over a set period of time
    • Variable rates can change over time.
      • When interest rates change, your variable rate mortgage will likely change. Why does this happen? The Federal Reserve System usually adjusts the federal funds rate target by 0.25% or 0.50% at a time. Interest rates are lowered to stimulate the economy. And are raised in order to slow down the economy and fight inflation.
      • This will impact the interest rate of your mortgage.
  • Why purchase a home?
    • Mortgage interest and property taxes may be tax deductible. By being able to claim these elements, most likely your overall tax liability will be reduced.
    • When you rent, you own nothing—the money is given to someone else. Many people argue that you should own a home because one day, you’ll pay that home off and it’ll be yours, rather than continuing to pay rent for the rest of your life.

The New York Times has a useful interactive calculator that considers all of this. Plug in all of your details—home price, interest rate, housing growth rate, closing costs, rental costs, etc.—and you’ll get a detailed view of what the costs and opportunity costs are.

Once you have decided that you are ready to purchase a home, how do you get started saving for the down payment?

  • Automatic deposits from your checking to your investment accounts. Granite Wealth can easily set this up for you.
  • Save raises and bonuses
  • Use tax refunds
  • Create a budget and stick to it
  • Round up programs – every time you make a transaction, you can round up to the nearest dollar amount and put that away in savings.
  • Use an app to track progress. Acorn, Mint, SavedPlus, Dollarbird and other budgeting tools may give you even more incentive to save.

Contact the Granite team to learn more and get started: Contact the Granite team.

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