Using Zillow to Figure a Down Payment

You’re thinking of getting a home someday. After seeing the current housing situation, you decide to be prepared for a home. How much house should you get? How much of a down payment are you going to need? What other expenses do you have to plan for?

There are many different opinions on how much house you can afford. The general consensus seems to be 2-3x your annual salary. Even if banks may suggest you can afford more, be careful. Look at your circumstances.

Do you have a high amount of debt? Considering pausing on buying a home and get that reduced as there are many other expenses included with purchasing a home (see below). It’s good to anticipate your financial needs ahead of time. Wat will bills be like after you purchase a home? Ask family and friends to get an idea.

How you can use Zillow to figure out a down payment.

Locate the city you want to live in. If you’re living in New York City or San Francisco, expect to need a HUGE down payment. Hopefully you income is also higher and can help you build your down payment. Use Zillow to locate affordable neighborhoods in the city and state you’re interested in.

Find the areas in the city with home you like. Within cities there are areas that have developed their own ‘personalities’. See for yourself if it’s the right area for you. Go there during different times and days.  If you’re a couple looking to start a family, you may not enjoy an area with a loud and active nightlife.

I also like to look at the Zestimate.  It can give you an idea if the asking price is reasonable. Select a couple of homes you would love to live in and determine the average price. Use this for your down payment fund estimate.

Aim for a down payment between 10-20%  the ‘dream home’. The advantage of this is that it will reduce your mortgage payment.

Stash your down payment fund in a high yield savings account. Speed along your savings by opening an account with banks with high interest savings like ING Direct, HSBC, Emigrant Direct, WaMu, and many others.

Remember there are other costs in buying a home (provided by Zillow). Try to include some buffer money for them. Also check the requirements for your state, as it can vary and you may have additional responsibilities.

• Appraisal
• Credit Report
• Closing Fee
• Title Search
• Homeowners’ Insurance
• Escrow Deposit for Property Taxes & Mortgage Insurance
• Transfer Taxes
• Recording Fees
• Processing Fee
• Underwriting Fee
• Loan Discount Points
• Pre-Paid Interest
• Property Tax
• Pest Inspection
  

Buying a home can be a great experience, but it can also be a nightmare. If you’re not in a position to buy a home, don’t worry. Rent can be a wise choice for many people. Don’t be impatient; wait for the right time.

Great Thoughts on Topic

Do you have more questions about getting a home and the basics of real estate? Here are some great articles I found on the web:

• So you want to buy a house…. @ Gather Little By Little
• The Continuing Saga of the First Time Home Buyer (That’s Me) @ Being Frugal
• 11 Tips for First-Time Homebuyers @ Get Rich Slowly
• The Real Scoop on Real Estate @ I Will Teach You To Be Rich

Photo Credit: by james.thompson

• The Stigma of Debt Is Gone, But Not The Sting       Browsing across the web, you stumble upon interesting things, some of which are quite informative. Dave Ramsey and others point out that early in the 20th century buying on credit was frowned upon: History also teaches us that debt wasn't always a way of life. In fact,......
• NC Trip Review     Photo Credit: joshstaiger   Yesterday I told you I was out of town (and out of state) doing some interviews. I wanted to give a quick recap of what's going on and our plans. My husband and I are considering moving out of our current city and state to......

• Your Home Pays You Back with Reverse Mortgages The follow is a guest post by Tanesha Morgan a writer for Personal Finance Analyst. Personal Finance Analyst is an online community of bloggers dedicated to taking the mystery out of money and helping you to live a happier, more successful life with the money you have. Lately, I have......
• Can You Afford to Buy a House? Owning your own home is supposed to be the American dream.  However, for people who’ve bought a home that they can’t afford, it’s been more like a nightmare.  I know you hear people say that now is a great time to buy a home if you can afford it.  Maybe......