Just because money is tight doesn’t mean you can’t achieve the dream of homeownership. Follow the tips below and you’ll be well on your way to making the dream a reality.
Calculate Your Income & Savings
How do you go about shopping for a house on a budget? Well, first you have to know what your budget even is. Calculating your housing budget is simple on the surface: simply add up your household income along with however much money you already have saved up, then subtract any expected debts or other expenses, such as car insurance, credit card fees, phone bills, and the like.
Things can get a bit more complicated when you have to account for costs where you don’t know what the exact amounts will be, like your down payment and mortgage terms. An online house payment calculator can help you estimate these things so you have a better idea of what to expect, but keep in mind that you won’t really know the full extent of the costs you’re looking at until you start talking to lenders and browsing properties for sale.
Consider Getting a Fixer-Upper
To many home buyers, a fixer-upper property is an immediate red flag. Why buy a house that needs maintenance and repair work when you can just buy a newer, better-condition property instead? The answer: newer houses are a lot more expensive than fixer-uppers. Additionally, the idea that only fixer-uppers require maintenance and repairs is a fallacy. All houses require both eventually. At least if you know about pre-existing issues, you can prepare for them ahead of time.
It’s worth noting that the cost of rehabilitating a fixer-upper isn’t always steep, especially not in comparison to what you paid to own it. Unless your fixer-upper is in especially dire condition, many issues can be handled individually over a long period of time, as you can afford them. Even better, you may be able to perform the necessary repairs yourself, saving a lot of money in the process.
Comparison-Shop Loan Options
Customarily, mortgage loans ask buyers to make a down payment of around 20% of a property’s asking price. As of this writing, the average interest for a 30-year fixed-rate mortgage is 2.938%. However, that doesn’t you don’t have other options. While it might be tempting to take the first loan offer that comes your way, comparison-shopping can help you find better, more affordable terms.
Furthermore, there are other types of home loans worth investigating. If you’re buying a house in a rural area, you may be eligible for a government-back USDA loan, which comes with lower interest rates and may not require any down payment at all. Similar terms exist for government-backed VA loans, which are available to buyers who are US Armed Services veterans.