How to Actually Afford to Buy a Home in America
Home buying hurdles do exist. In today’s market, housing prices have soared, rent has increased, and the dollar doesn’t stretch as far as it used to. Through financial creativity and some flexibility, hurdles can be cleared and buying a home can become a reality.
Understand your finance options!
Take the first step to home ownership by knowing what financing options are available and the mortgage programs for which you qualify. There are several types of mortgages each with their own pros and cons. Do some research and talk to a broker about which option is best for you. When discussing different mortgage options, ask about the minimum down payment required. Not all programs require 20%. This gives you an indication of how much you will need to save before making an offer on a home.
Renters- Make enough money to save!
Renters wanting to buy a home face tough financial headwinds as there are fewer resources available to them. Renting households typically earn a median income of $37,500 annually, which is about $40,000 less than the median household income of those who recently bought a home. While there are ways to purchase a house while making less than $75,000 a year, it is hard to buy if you make significantly less. Even two combined incomes at the $37,500 income level could struggle to afford to buy in a competitive market. Bottom line, look at your finances to know what you can afford and what needs to be saved.
Down Payment Hurdle
According to a Zillow Housing Aspirations Report, two-thirds of renters cite the down payment as the biggest hurdle in purchasing a home. 20% of the home’s purchase price is traditionally associated with down payments. If you’re purchasing a home for $200,000, that equates to $40,000 upfront just to move in. Other options for down payments are now available and require less than 20%. Buyers have become creative and now piece together a down payment from multiple sources. It’s not uncommon to receive help in the form of a gift or loans from friends and family. Saving for a down payment is possible!
Be flexible with deal breakers
In today’s market, finding a home in the exact neighborhood and in the condition you want may prove to be a difficult task. Buyers are becoming more flexible and willing to look outside of their ideal location, house condition, and home type. Affordable housing does exist but you may have to be willing to accept a longer commute or make a few compromises on wish list items. Before you search for a home, know exactly where and on what you are willing to be flexible.
At America’s Moneyline, we know how hard our partnered realtors work to get a home buyer or seller their dream home. It is our mission to position the clients’ offer to be accepted, not just “considered”. Our offers stand out because they are heavily backed.
Contact America’s Moneyline today to get started.