Real Estate – Buying: How Much To Save

When it comes to real estate buying, one of the first questions people want to know is: “How much should I save?” Loan providers are willing to give you up to 95 percent of the purchase price of your home at a favorable interest rate, particularly if you don’t mind taking 30 years to pay them back. They are willing to do this if you have a steady job and good credit history, and they feel you will pay them back.

Government agencies like the Federal Reserve, the Federal Deposit Insurance Commission, the Department of Housing and Urban Development and the Federal Housing Finance Agency recommend saving 20 percent for a downpayment before real estate buying. So, that would mean you’d save $20,000 for a $100,000 home. However, the Center for Responsible Lending argues that the downpayment should be much lower to make housing more affordable and accessible to the general public.

One thing to keep in mind when real estate buying is that the more you can afford upfront, the less you will pay for interest over time. According to the Mint Life magazine, you will pay about $50,900 MORE toward interest on a $100,000 home if you opt for a 30-year, rather than a 15-year, loan. Even if you can’t afford a 15-year loan with higher monthly payments, you can shave five years off your repayment term and save $18,000 in interest just by paying an extra $48 per month. If you add on an extra $123 per month, you’ll cut your term by 10 years and save $35,000, so it’s something to keep in mind if you’re real estate buying soon.

If you have any questions at all about buying Chevy Chase real estate, Bethesda homes for sale, or any property in and around D.C., please don’t hesitate to contact us, and we will be happy to answer as best we can.

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