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June 25, 2024
By: Jennifer Floyd
Saving for a Down Payment and Understanding Credit Scores
As the dream of homeownership grows stronger, residents of Covington and Newton County are looking for ways to make this dream a reality. At Newton Federal, we believe that informed financial planning is the key to achieving homeownership. In honor of National Homeownership Month, let’s explore some essential steps for saving for a down payment and understanding credit scores.
Saving for a Down Payment
1. Set a Goal
First, determine how much you need for a down payment. While 20% is a wonderful target, many loan programs, including FHA and VA loans, offer lower down payment options and many homebuyers put as little as 3% down.
2. Create a Budget
Analyze your current income and expenses to identify areas where you can save. Create a monthly budget that allocates a portion of your income towards your down payment fund. Consider cutting non-essential expenses and prioritizing savings.
3. Open a Dedicated Savings Account
Establish a separate savings account specifically for your down payment. This helps keep your goal in focus and minimizes temptations to dip into the funds for other expenses. Newton
Federal offers various savings accounts that can help you stay on track.
4. Automate Your Savings
Set up automatic transfers from your checking account to your dedicated savings account. Automating your savings ensures consistency and helps you reach your goal faster without having
to think about it each month.
5. Explore Additional Income Sources
Consider taking on part-time work, freelance projects, or selling unused items to boost your savings. Every extra dollar you earn can bring you closer to your homeownership dream.
6. Take Advantage of Down Payment Assistance Programs
Research local and state programs that offer down payment assistance. Newton Federal can provide information on available programs for first-time homebuyers in Covington and Newton County.
Understanding Credit Scores
1. Know Your Credit Score
Your credit score is a crucial factor in securing a mortgage and determining your interest rate. Obtain a free copy of your credit report from each of the three major credit bureaus annually. Review your reports for accuracy and be sure to dispute any errors.
2. Understand Credit Score Factors
Your credit score is influenced by several factors, including payment history, amounts owed, length of credit history, new credit, and types of credit used. Paying bills on time, keeping credit card balances low, and avoiding new credit inquiries can positively impact your score.
3. Improve Your Credit Score
If your credit score needs improvement, take proactive steps:
- Pay Bills on Time: Consistent, on-time payments are the most significant factor in your credit score.
- Reduce Debt: Pay down existing debt, especially high-interest credit card balances.
- Avoid Opening New Accounts: Each new credit inquiry can temporarily lower your score. Avoid opening new accounts while planning for a mortgage.
- Maintain Old Accounts: Keeping older accounts open can positively impact the length of your credit history.
4. Seek Professional Advice
Our Mortgage Director can help you understand your credit report and provide personalized advice on improving your score. Our team is here to support you through the financial planning process.
Achieving homeownership may seem daunting in today’s market, but it is within reach with careful financial planning. By setting a clear savings goal for your down payment and understanding how to manage your credit score, you can pave the way to owning your dream home. Newton Federal is dedicated to helping our community members navigate this journey with confidence and ease.
For more personalized advice and to explore our mortgage options, contact us today. Let’s make your homeownership dream a reality this National Homeownership Month!
Tonya Presley Burnett
VP, Mortgage Servicing Director
c: (770) 385-3577
e: tonyaburnett@newtonfederal.com
NMLS: 430694
Newton Federal
3175 Hwy 278
Covington, GA
30014
