How to Financially Prepare to Buy a Home in Connecticut

Posted on November 17, 2017 · Posted in Connecticut First Time Mortgage, Connecticut Home Purchase Mortgage

As you consider buying a home, the first thing to do is ensure that you are financially ready and in the best position to purchase a home.  This means you must determine how much money you will need at closing.  There are two costs associated with a home purchase:


Down Payment


Although there are some programs in CT that will allow for 100% financing, they have strict qualifying parameters and not all buyers will be eligible.  This means that you can not rely on 100% financing and will have to put aside the minimum down payment of 3.5% of the purchase price.  For many buyers, putting down 5% can mean better loan terms and less PMI.


Closing Costs


Closing costs include all your settlement charges associated with the loan.  These include fees for underwriting, attorney, title and recording fees.  Buyers are also required to pay a year of homeowners insurance in advance as well as 6-8 months of property tax reserves.  (This is almost always the most costly part of your settlement charges.)  On average, most loans will have associated closing costs of as much as 3-5% of the loan value.  Like the down payment, some sellers will agree to “seller concessions” which can be used to pay for the closing costs.  But, not all sellers will agree to this, so buyers need to be prepared to have money set aside for these expenses.


Once you have a clear understanding of how much money you will need to set aside, you can begin to prioritize saving to become a homeowner!  Determine how much you can save each pay period for your home buying fund and how long you will need to do so to gain the savings needed. (You may even want to auto deposit a portion of your pay check into a special savings account for this purpose.)  Then commit to doing that each and every pay check.  Be diligent and cut back spending where you are able and you will be in a position to purchase a home even sooner!


If you would like more information on the various loan programs that you may qualify for, or help in becoming purchase ready, please contact me directly anytime.



Stephanie Smith

NMLS# 1083107/Company NMLS# 117273


FHA Disclosure


NMLS# 117273, Northeast Financial, 860-788-7237


The principal and interest payment on a 203,500 30 year FHA fixed rate loan at 3.25% on 96.5% loan to value is 1,025.99 with 0 points due at closing.  The APR is 4.491%.  Payments include a one time upfront mortgage insurance premium (MIP) at 1.75% of the base loan amount and monthly MIP is calculated at .85% of the base loan amount.  The .85% monthly MIP is required for a specific period of time regardless of your down payment or equity in your home.  The principal, mortgage insurance, and interest payment does not include property taxes or home owner’s insurance premiums, which will result in a higher actual monthly payment.  Rates current as of 6/26/17