5 steps to save up for a Boston condo for sale
Determine How Much You Should Save
By putting down 20 percent of the purchase price, you increase your chances of getting approved for low-interest financing without private mortgage insurance. The rest of the money goes toward prepaid items such as homeowners insurance and condo association fees. Moreover, you will likely be required to show you have three months of household expenses saved up as cash reserves. By striving to save up this 20 percent, you can close with a loan-to-value ratio higher than 80 percent if market conditions urge you to do so.
Isolate a Savings Account
You are better off setting aside a bank account that serves the sole purpose of keeping the funds you are saving toward your Boston condo purchase. Draft a budget and figure out a way to transfer money directly from your paycheck to this account, which you should not withdraw from unless the mortgage lender instructs you to do so prior to closing.
Earn Interest
The Federal Reserve intends to raise interest rates in 2018, and it may than one increase in 2018. If you have a target date to purchase your Boston condo a few months down the line, you may want to look into a three-month certificate of deposit with a “bump-up” feature that increases your rate of return when the Federal Reserve votes to increase the prime rate of lending.
Cut Down on Expenses
Cutting down on monthly expenses is always easier said than done, but it happens to be very effective. Think about the things you can realistically live without. For example, you could save more than $250 over three months if you eliminate your daily cup of Starbucks. Cooking and eating at home is another strategy that allows you to save up even faster.
Maximize Your Earning Potential
Freelance work and taking on as much overtime as possible can help you reach your financial goals, but you don’t have to be alone in this endeavor. If your partner or one of your relatives will occupy the condo, he or she should also consider maximizing his or her income.
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