Homeownership, a cornerstone of the proverbial American Dream, is seemingly becoming a distant pipedream. Sandwiched between skyrocketing real estate prices, perpetual rate hikes, and stagnant wages, the American people are stuck between a ‘rock and a hard place’ finding it even more impossible to get out of the societal “rat race.” However, with the right strategies in place, owning a home doesn’t have to remain a distant dream.
There are several effective ways to make homeownership actually affordable in today’s market. And it all comes down to strategy and education:
Saving for a Larger Down Payment
A substantial down payment can significantly lower your monthly mortgage payments. With a 20% down payment, the need for PMI (which can range anywhere from $20 – $600+ per month) goes away, effectively saving thousands of dollars per year in monthly housing expenses as well as hundreds of thousands in interest over the life of your loan. Now although a 20% down payment is not necessary to purchase a home, and you can purchase a home with as little as 3% in some cases, the more you put down, the less your payment will be.
Pay Off Debt to Increase Monthly Cash Flow
Contrary to the above, in many cases using some of your savings to pay off debt instead of increasing your down payment may be more effective in lowering your overall monthly expenses. It’s important to understand all your options when it comes to saving for a home purchase.
Seller Paid Interest Rate Buydown
This is a hot topic in today’s market. With dwindling demand, sellers are more inclined to offer buyers ‘seller credit’ or ‘seller concessions’ to help their property sell faster and garner more interest in their sale. With seller credit, buyers can lower their rate and monthly payment via a permanent or temporary interest rate buy down. This is extremely effective in significantly reducing monthly mortgage payments.
Improve Your Credit Score
A higher credit score can unlock lower interest rates, lower PMI, and lower insurance premiums. Ensure you pay off debts on time, keep your credit card balances low, and check your credit report for any errors. A good lender can help put you on a path to increasing your credit score fast and efficiently.
Explore First-Time Homebuyer Programs
Many lenders offer first-time homebuyer programs that provide down payment assistance and/or discounted mortgage rates. Not all lenders offer these programs, so make sure to find one that has access to multiple programs (like us!).
After several years of artificially low interest rates, buyers have been conditioned to think that the market is a lot more affordable than it actually is, and buying a move in ready or brand spankin’ new home is a necessity. There are many renovation loan programs out there that can help you build/renovate your dream home. Buying a cheaper property or a fixer upper and financing the renovation can help get you into a home at a much cheaper out of pocket and monthly payment. With a renovation loan, you can finance the entire remodel, making it a lot easier to create the home of your dreams, rather than finding an existing one.
Understanding the options available to you is KEY to being able to achieve the dream of homeownership with confidence. Reach out to my team to guide you through the process and show you that although rates are high and home prices are high, buying a home shouldn’t be a dream of the past. Remember, with the right approach, the keys to your dream home are well within reach. Your journey towards homeownership starts now!