3 Money Habits that are Making it Harder to Save for a Down Payment

If you are thinking about buying a home in 2021, one of the first things you need to do is save enough money for a down payment. That’s not an easy task, and if you’re having trouble saving money, it might be time to examine your current spending habits. Here are three common habits that can make it much harder to save that 5% to 20% for your down payment.

Are you participating in these bad spending habits that make it harder to save for a down payment on a home?

Habit 1: Not paying attention to your monthly expenses.

It’s easy to lose track of where your money is going every month. In fact, there might be a lot of things that you’re spending money on without even thinking about it. For example, if you still have that gym membership and haven’t been to the gym in more than a year—not counting any forced absence because of COVID-19—it’s time to cancel it and save $20 to $100 a month. Other things you may be wasting money on include:

  • Cable or satellite bill
  • Streaming services you never watch or listen to
  • Expensive cell phone bills and/or data plans (seriously, WiFi is everywhere these days)
  • Monthly subscription boxes (i.e., FabFitFun, StitchFix, BarkBox, Loot Crate)
  • Digital or print newspaper/magazine subscriptions

Apps like PocketGuard or Mint can help identify monthly recurring expenses so you can get rid of them.

Habit 2: Eating (and drinking) out a lot.

You’ve probably heard this one before, but it bears repeating: eating out, especially if you are buying alcohol, is a lot more expensive than eating at home. We’re not saying you should never eat out, but make it a special occasion only. Packing a lunch when you head out for work or skipping the takeout in favor of a home-cooked meal is a great way to cut your food budget. If planning meals is hard, you can look at options like Freshly, which send you pre-packaged meals that you can heat up and cost as little as $8.50 a meal—a lot less than many restaurant meals. Other great options include buying a slow cooker or Instant Pot. With these kitchen gadgets you can dump a bunch of raw ingredients in at the beginning or end of the day and within a few hours (slow cooker) or a few minutes (Instant Pot) you have an entire meal, plus leftovers for lunch tomorrow that even a novice chef can handle.

Habit 3: Spending more on anything than you need to spend.

That’s pretty broad, so here’s the breakdown: if you don’t need to spend the extra money, don’t do it. Buy generic brands instead of brand names. Turn down your thermostat one or two degrees in the winter, and turn it up one or two in the summer to save money on utility bills every month. Don’t buy those app add-ons. Unsubscribe retail store emails that tempt you to buy something you definitely don’t need just because it’s 30% off today only. You’d be surprised at how much you can actually save by shaving just a little here and there from the margins.

Once you master your spending habits, make sure you put that money away in a savings account so you can buy that dream home. When it’s time to do that, Integrity First Lending is here to help you get a mortgage.

Ready to Set Home Ownership Goals for the New Year?

One of the most common rituals for the new year is the habit of setting goals. Often these goals revolve around personal improvement, or finding ways to make a better life in the coming year. For those who have been renting, now is the perfect time to set a goal for achieving home ownership in 2021. After a difficult year in 2020, here are some of the steps you can take to achieve that goal in the new year.

Set some goals for the New Year that will help you get closer to your dream of owning a home.

Step 1: Set the goal

Okay, this one might seem a little too obvious, but simply having the goal—preferably in writing so you’re a little more committed—is often the first step to achieving home ownership. It makes the far-off dream of having your own home feel a little more like a reality. Bonus points if you set a specific date (or a range like “fall 2021” or “spring 2022”) for your goal.

Step 2: Get your finances in order

The hardest part about owning a home is making sure that your financial life is in order. Some of the most important steps you can take to help put you in a position to get a mortgage loan include:

  • Paying down or paying off debt
  • Putting money away in a savings account to pay for the down payment
  • Paying all your current bills on time to keep your credit score high
  • Avoiding taking on unnecessary new debt, such as new credit cards or new car loans
  • Create a budget to keep your spending on track and your home ownership goals in reach

Step 3: Understand what you can afford to borrow

Before you apply for a mortgage or start shopping for a new home, figure out how much you can afford to borrow based on how much you want to pay each month. You can use online mortgage calculators and either put in the price of the house to see the monthly payment, or put in a specific monthly payment to see what size loan would have that payment. When setting your house payment budget, don’t forget that your monthly payments will include property taxes and homeowners insurance in addition to the principal and interest on the loan.

Step 4: Talk to a mortgage lender about available loans

Another important step toward owning a home is figuring out what type of home loan you will get. There are several options available, depending on your income, credit score, where you live, and whether you qualify for things like the VA loans (for active duty or retired military). Knowing your options can help you pinpoint how much money you need for a down payment, and what credit score you need to get approved.

If owning a home is on your wish list, make it more of a reality by setting specific goals this New Year to get there. Talk to Integrity First Lending to find out more about home loans available and how you can achieve your dream.

Simple Steps to Save for a Down Payment on Your Next Home (Part 2)

In part one of this blog post we covered the first steps to help you save for a down payment, which involved:

  • Knowing how much you need to save
  • Setting a timeline for saving
  • Selecting the loan you would be eligible for, so you know how much down payment you need (5% to 20%+)

Now let’s talk about some of the money habits that can help you get there faster.

Ready to save for your down payment? Here are some helpful tips and steps you can take.

4: Create a realistic budget

Saving money is hard enough, but it’s even harder without a budget. Create a realistic budget based on your essential expenses—food, housing, cars, student loan debt, etc.—and non-essential expenses like entertainment, eating out, and shopping. One of the biggest mistakes people make here is not being realistic about your actual spending. For example, you can put $200 for your food budget, but if you actually spend $600 a month then you are not likely to hit your $200 goal.

Once you have your budget, put savings into a separate account immediately after you get paid. Treating savings as an essential “expense” and setting it aside can help you avoid spending it on other things. Having your savings automatically transferred from your checking account is another great way to make sure you do it every month.

5: Find ways to make more money

If money is already tight and it would be very hard to save money based on your current income, look for ways to earn more. Some examples of how to earn more include:

  • Asking for a raise at your next performance review or right away
  • Getting a new job if your current one isn’t making you happy and doesn’t pay enough
  • Downsizing your current living arrangements—for example, sell a vehicle to get rid of a car payment or move to a smaller or less expensive apartment
  • Picking up some gig work or a second job if you have time
  • Renting out a room in your house or using apps like Neighbor to rent out some storage space or allow someone to park in your unused driveway space

6: Eliminate bad habits that cost a lot

Sometimes the best way to save money is to figure out where you are spending a lot on something that is bad for you or your health. For example:

  • Cut back on smoking or quit altogether
  • Avoid buying alcoholic beverages when you go out to eat
  • Cook at home instead of eating out
  • Avoid gambling or buying lottery tickets
  • Give yourself a spa day at home instead of paying for manicures or pedicures
  • Make coffee in the kitchen instead of stopping at Starbucks

For many people saving for a down payment seems out of reach, but with the right steps, you can save enough to get there. Talk to our lenders at Integrity First Lending for more tips and help making your American Dream of owning a home more of a reality.

Simple Steps to Save for a Down Payment on Your Next Home (Part 1)

There are few things in life as big as buying your very own home. Homeownership has long been a central part of what many people call the “American Dream,” but it’s not something that you can achieve easily. One of the biggest hurdles to buying a new home is having enough money to put as a down payment. If you are trying to save for your next home, here are some ways you can save more to get into your dream home sooner.

Saving for a down payment on a home doesn’t have to be unachievable. Take these simple steps to get closer to your dream of buying a home.

Step 1: Identify your goal

It’s hard to save for something if you’re not exactly sure how much you will need. You don’t have to have an exact amount for your down payment, but it certainly helps to have a rough idea. One of the easiest ways to identify a down payment savings goal is to use an online mortgage calculator to help determine what you can afford. Put in the amount you can spend on a mortgage to see how much you can borrow for a home. Calculate 5% to 20% of that total to get your down payment (we know that’s a big range, we’ll talk about that in Step 3).

Step 2: Set a timeline

Along with deciding how much you want to save, set a goal for when you would like to be able to buy your home. Again, this doesn’t have to be an exact day, but you might set a goal to be in your new home by the first quarter of 2022, for example, which gives you about 12-15 months to save. Your specific goal might be longer or shorter depending on what you currently have in savings or how much you can afford to save each month.

Step 3: Choose the loan

It’s important to figure out what kind of loan might be right for you. The type of loan you get depends on several factors:

A lender like Integrity First Lending can help you determine which loans might work best based on your financial and personal situation. Knowing that can help you figure out whether you need 20% down (for a conventional loan with no private mortgage insurance), 5% down with loan options like FHA for first-time homebuyers, or something in between.

In part two of this blog post we’ll cover the next four steps to help you save for a down payment on your home. In the meantime, talk to Integrity First Lending to get a better idea of how much you will need to save for your next home.

Are Interest Rates Going to Rise After the 2020 Election?

Now that the events of early November are starting to settle, it looks increasingly president-elect Joe Biden will become the 46th president of the United States. Many people are wondering what effect this change might have on interest rates. After all, we have seen a long stretch of record low rates. Homebuyers in the market to get a mortgage loan in the coming months want to know if it seems likely that rates will remain low, or if an increase is coming.

First, it’s important to mention that nobody can predict exactly what the interest rate will do even a week from now. There are many factors that go into setting interest rates, and how lenders assess the overall risk to determine what rates they will offer. However, we can look at some broad trends to give you an idea of what might be coming for interest rates. That helps determine whether now is a good time to act to get your mortgage loan or refinance loan secured.

The 2020 election is over, and now many potential homebuyers are wondering how it might impact what have been historically low rates.

Investors’ initial reaction

The initial reaction by investors seems to be one of optimism. The stock market rallied in the wake of the election in early November after Biden was declared president-elect. Positive vaccine trial results from two leading manufacturers also sent stocks soaring, resulting in the highest month of stock market gains since 1987.  Wall Street appears to be feeling positive about the people Biden plans to appoint in his Cabinet. Many believe he will bring a moderate approach to business and regulation, which is good for markets.

Even as the market is generally looking up right now, though, interest rates have remained low. Since rates are not tied directly to stock market performance, this is likely the result of other economic indicators.

COVID-19 uncertainty still remains

Another factor in the future of rates is what happens with COVID-19. Despite the stock market gains, a significant portion of the U.S. population is still unemployed or underemployed as a result of COVID-19. That means the economy may continue to sputter and struggle for several months. A new Congress may provide some stimulus, but most economists agree that it will take several months (or even years) for the economy to fully recover.

However, if the vaccines provide the boost that they promise right now, there is a good chance that interest rates will rise as investors look for bigger returns and things return mostly to normal.

What it means for a borrower

If you watched interest rates in 2020, heard discussions of “record lows” or “historic lows,” and thought it couldn’t get any lower, you were probably surprised to see that rates kept falling. But even historically low runs have to come to an end at some point, so the current low rates will not last forever. If you’re thinking about buying a home, right now is the perfect time to do it.

Contact Integrity First Lending to learn more about our mortgage loan options. We’ll help you lock in the current low rates.

How the Right Mortgage Lender Can Save You Thousands on a Home

As you prepare to apply for a mortgage loan, there is a lot to do. You need to get prequalified and/or preapproved, you need to set your budget, and you need to make sure your finances are in order to get the best mortgage rate. But there is one additional item to add to your checklist: comparing mortgage lenders. To some that might seem like about as much fun as getting a root canal without anesthetic, but it’s actually a really important step in the process. Doing just that one simple thing can save you tens of thousands over the life of your loan.

Shop around with different lenders to get the best interest rates; we’re confident you’ll see that Integrity First Lending is the best.

Why Rates Differ Between Lenders

Since interest rates are reported by the federal government, many people mistakenly believe that all mortgage lenders offer the same rates.In fact, every lender will have a slightly different rate available to buyers and there are several reasons why:

  • Risk assessment processes – each lender has different criteria for evaluating the risk level of a buyer. The more stringent they are in evaluating risks, the higher the interest rate will be to borrow money.
  • Competition with other lenders – some lenders might be willing to offer slightly lower rates in order to win your business over their competitors. That’s why experts recommend comparing at least three lenders to see what they offer.
  • Expenses and costs – as with any business, there are operating costs, and some lenders will charge higher rates to cover these costs.

Why Shopping Around Pays

The cost of your home is obviously going to influence your monthly payment. The second biggest factor behind your purchase price is your interest rate. Let’s say you get a $300,000 mortgage that you will pay off over 30 years. With a 4% interest rate you pay $205,023 in interest over the life of your loan. With a 4.25% interest rate, you end up paying $219,667. That’s a savings (or cost) of almost $15,000 with just a quarter-percent interest rate change.

There are also other variations in loan costs and fees, so shopping around can help you get a sense of whether your lender is charging a fair amount for things like the origination fees, mortgage insurance premiums, and any other third-party fees. Comparing lenders can also help you ensure that you like the people you’re working with and you trust them—unfortunately that’s not a given, some lenders are overly pushy, rude, or lack the right knowledge to help you. Buying a home is a huge decision, and having the right lender can make all the difference.

Plus a good lender will be able to provide you with several options for loans based on your individual situation. If you don’t shop around, you might not learn about all the options available to you.

Shop Today with Integrity First Lending

We are confident that if you shop around you will discover that Integrity First Lending has the best rates, low fees, and plenty of choices for your mortgage loan. Plus we have a friendly and helpful team of lenders to get you into the home of your dreams. Shop today to learn more.

3 Things Every Future Homebuyer Needs to Know

So you’ve decided to take the next steps toward buying a new home? Congratulations! Home ownership is one of the best ways to build wealth with a long-term investment. It can also provide you with added stability and perks like tax deductions for some homeowners. It is also a big step and definitely not a decision you want to take lightly.

Future homebuyers can improve the buying experience and lower their total mortgage costs with these tips.

1: Your credit history is the most important thing

Mortgage lenders provide loans to homebuyers based on their credit score, a number between 300 and 850 that tells lenders how reliable you are at paying back debt so they can determine the risk in lending you money. If you have a low credit score (under 580) you won’t be able to qualify for a home loan. If your score is at or above 580, but still on the lower side (below 700) then you are probably paying a higher interest rate. Even a 0.5% rate increase can add up to thousands of dollars in extra interest over the life of your loan, and make your monthly payments higher.

Start repairing poor credit now before you apply for a loan. You can do that by:

  • Paying down all your debt from student loans, vehicle, credit cards, etc.
  • Making all your payments on time
  • Building up your savings account
  • Not opening unnecessary new credit accounts (retail store credit lines, for example)

2: Save for more than just your down payment

It is a good idea to save money for a down payment; the more you have to put down, the better interest rate you can get. You can also lower your monthly payments by putting 20% down because you won’t have to pay the mortgage interest premium (MIP). However, there are a lot of other costs associated with buying a new home, so in addition to saving for a down payment, also save for things like:

  • Closing costs – these usually total about 3-4% of your total home price, and they are in addition to your loan. You may be able to roll some of it into your loan or negotiate with the home seller to pay some or all closing costs.
  • Moving expenses – you need cash for things like movers or a moving van rental, boxes, packaging, and other supplies. If you’re moving a long distance, factor in travel costs too.
  • Other expenses – you may also need cash for things like furniture, window coverings, renovations, and landscaping after moving in.

3: Get Preapproved First

Before you start shopping for your new home, talk to a lender to get preapproved. This process is relatively simple, but it provides you with an idea of how much you will be able to borrow so you can find a house in your budget. It also shows sellers you are serious about buying when you make an offer.

If you are planning a future home purchase, talk to Integrity First Lending today to get preapproved.

Understanding What a “Federally-Backed” Mortgage Loan Means

There are several different types of mortgage loans, but mostly they fall into two larger “buckets”: loans that are federally-backed, and loans that are backed by private companies. There are some important differences between the two, so it’s good to understand some of the benefits of a federally-backed mortgage, and how to find out if yours falls into that category.

Learn whether you have a federally-backed mortgage, or whether you should consider one for your home loan.

Government-Sponsored Entities (GSEs)

Mortgages that are backed by the federal government are funded through government-sponsored entities, or GSEs. About 50% of all mortgage loans in the U.S. are backed by a GSE, which makes them by far the most popular choice for millions of homeowners. There are five different types of federally-backed mortgages:

  • FHA
  • VA
  • USDA
  • Fannie Mae
  • Freddie Mac

Where this gets a little confusing, though, is that sometimes your mortgage will be federally backed, but it is administered by one of the more traditional private lenders, such as JP Morgan Chase or Wells Fargo. That means you will see the name of the private lender on your statements, and make payments to that lender, but your loan is still backed by a GSE.

Pros and Cons of Federally-Backed Mortgages

One of the biggest benefits of getting a federally-backed mortgage like an FHA or VA loan is that these loans often have different requirements for down payment and minimum credit scores. That makes them a desirable option for a first-time homebuyer without a lot of cash to make a 20% down payment, or someone who has a history of less-than-perfect credit. There are also some federally-backed mortgage loans that waive the mortgage insurance premium (MIP) even if you don’t have 20% equity in your home, which can save a lot of money on monthly payments.

However, one of the biggest drawbacks of loans through GSEs is that they do have specific requirements to qualify. That means not everyone is able to get a loan through these programs. For example, only someone who served/is actively serving in the armed forces or is the spouse of someone who served or is serving can qualify for a VA loan. Another potential drawback is that while these loans often have lower credit score requirements, they do still have minimum credit scores (usually at least 580) to get qualified.

Find Out More

If you want to find out whether your loan is federally back, you can use the Freddie Mac or Fannie Mae lookup tools. You can also call your loan servicer to ask (they are required by law to tell you). If you have questions about whether you can get a federally-backed loan, talk to Integrity First Lending today.

Will Interest Rates Get Any Lower?

You have probably noticed that mortgage rates have been dropping in the last few months. Since the start of 2020, when rates were already near historic lows, they have continued to decline. In fact, this year alone the interest rates on mortgages have hit record lows 11 different times. If you are in the marketing for a mortgage loan or thinking about refinancing, you are probably wondering whether they will keep going down or if now is a good time.

Interest rates are at rock-bottom levels, but will they keep going lower We’ll examine the current rates.

Mortgage Loan Rate Fluctuations in 2020

There are a lot of market factors that go into the mortgage loan rates. Under normal circumstances, the Federal Reserve sets basic interest rates (the rate that mortgage loans are based on) as a way to control inflation and/or provide flexibility in the markets for companies and individuals to borrow cash. Whether rates go up or down often depends on whether the economy is in a positive or negative trend.

However, 2020 has proven to be anything but normal. Current low interest rates have been steadily declining as the economy took a big hit in the wake of COVID-19. Election years also usually contribute to some volatility in the interest rates—the market adjusts in October based on what they think might happen with the election, then if it doesn’t happen as planned (like in 2016 when Trump unexpectedly won) you can get a quick increase in mortgage rates as investors recalibrate expectations.

COVID-19 itself is also a wildcard in today’s interest rates. Homebuying has remained relatively high in spite of the overall bad economy, but that might slow down if the virus continues to depress business. A vaccine could also provide an economic boost, which could change interest rates as well if markets rally, driving them up from their current rock-bottom levels.

“Timing the Market”

Unfortunately there is no way to actually predict what mortgage loan rates will do in the future, so if you are thinking about trying to “time the market” to get the lowest rate, it’s not something that you can do with any level of certainty. Anyone who tells you otherwise is probably not being honest with you. However, you can look at some of the broad economic trends to see what might happen with rates in the coming months.

What Should You Do?

If you’re on the fence about whether to get a mortgage loan right now, you probably should go ahead. Although interest rates could decline again, they are probably not going to hit much lower than the current levels, and they could go up in the coming months. If they do end up going down by a lot, you can always refinance to a lower rate but if they go up you will be stuck paying whatever the current rates are at the time.

Contact Integrity First Lending

Integrity First Lending can help you figure out what mortgage rates you qualify for and get the best rates for your home loan. Call today to learn more.

Does a No-Cost Loan Really Have No Closing Costs?

As you are deciding on which home loan is going to work best for your financial situation, one of the things you will need to discuss with your lender is how much you can spend on closing costs.

Understanding closing costs and how you can avoid paying them up front.

Understanding Closing Costs

“Closing costs” is a broad term that is used to describe a variety of fees that homeowners normally have to pay when they purchase a home or refinance in an existing home. A couple of items on the list of closing costs are paid by the seller, like the real estate agent commission if applicable, but primarily they fall to the buyer. It’s important to understand what they are and the ways that you might be able to avoid paying closing costs.

On average, closing costs will be about 2% to 5% of your total loan (on a $300,000 house that can be as much as $15,000). They vary by lender, although there are some things that you can expect from any lender, such as an appraisal fee and home inspection fee. You can find a full list of the most common fees here.

Paying for Closing Costs

There are a few ways you can pay for closing costs:

  • Pay them up front with a one-time cash payment
  • Fold them into the total loan (which increases your loan principal)
  • Request that the seller cover some or all of the costs

What About a No-Cost Loan?

Some lenders (like Integrity First Lending) also offer no-cost loans. These are a great option for homeowners who don’t have enough cash to pay closing costs at the time you purchase the home. A no-cost loan allows you to move forward with your home purchase right away. However, just because you don’t pay the costs in cash at closing doesn’t mean you never pay for the closing costs.

Here’s how it works:

  • You are approved for a loan through Integrity First Lending at a specific interest rate
  • Integrity First Lending issues a “rebate” at your closing to cover the costs
  • Your interest rate will be raised slightly to cover the closing cost rebate, adding a small amount to your monthly payments instead of a large lump sum of money at closing
  • You can include the broker’s commission in your rebate as part of your no-cost loan

This is a great option for homeowners who want to keep some extra cash for costs you will encounter when you move in, like landscaping, fencing, window coverings, and more. These can add up, and having more cash in your bank account to cover them can help you avoid more debt. Talk to Integrity First Lending today to learn more about this option.