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Better Than 0%
You are serious about buying a home. Now you need to ask yourself how much should you be saving to seal the deal?
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Better Than 0%
You are serious about buying a home. Now you need to ask yourself how much should you be saving to seal the deal?

Lenders (like Access CU and our mortgage partner: CU/America) look at your pretax income when determining how to qualify you for a mortgage loan. You should do the same. Use a percentage of your gross income to determine how much to save.

Short Term: Saving 20 percent of your income could catapult you into purchasing a home in the next 12 to 16 months. For example, if you're earning $96,000 per year, then that's $19,200 saved after one year. $28,800 saved after a year and six months, which can be plenty to make a good down payment.

Long Term: Ten (10) percent of your pretax income is a great place to start. Using the same example of $96,000, that's $9,600 per year allocated for home savings. It would only take an extra year to come up with the same type of cash in the above short-term example one-year goal.

Taking a percentage of your income is certainly no easy task. It requires discipline, and attention to detail to put that money in Access CU.

Income Sources to Supplement Your Plan: While the following are potential sources for a down payment, make sure you consult with a financial adviser before you tap into your nest egg to make sure it's the best move. With that said, here are the options:

• 401(k)s -- If you have an employer match a percentage of your monthly contribution, this can aid you in purchasing a home faster, as the majority of 401(k) accounts have the ability to borrow for buying a home as a first-time buyer. For example, if you are receiving a 50 percent match of your monthly contributions your 401(k), then you can kick-start the time it takes you to save the cash.

• IRA -- These accounts grow with the market and have the same concept as the 401(k), although without the matching. Such an account is a great place to accumulate money in an interest-bearing account that has provisions to purchase a first home.

• CDs and money market accounts -- These accounts also are a source to help you generate additional funds to save in addition to your monthly savings contribution. You can even set up electronic funds transfers from your paycheck to funnel into these other banking sources in the event saving that money on your own becomes too difficult.

It All Comes Down to Your Home Price: When you buy a home there's the down payment and the closing costs. Those two costs will equal the total cash needed to close. Closing costs with the credit union can be as much as 75% lower than the local bank or mortgage company. To zero in on this number, we recommend contacting Access CUto get an estimate of what you may need to save up for.

Down Payment Requirements for Loans: How much cash you will need to purchase a house is dependent on the loan program, purchase price range and certainly your market area. For a 30-fixed conventional mortgage, plan on putting down 20%.

You can contact Access Credit Union’s mortgage company (CU/America) at (630) 620-5200 to get more detailed information. They can give you an idea where your savings goal should be as well as what their current rates are. Also, the credit union can help you set up a savings account where you can put your down payment and closing cost funds in for safe-keeping. We can also set up a direct deposit directly into those accounts so you need to do nothing extra except watch the account grow towards your goal. Call us at (708) 343-0228 during business hours, contact us, or stop by. Click here for locations and hours.


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