Homebuyers face difficult hurdles when purchasing their first home. House prices are higher than they’ve ever been, making it a challenge to save the necessary down payment and to afford the monthly mortgage payments as well.
Even though these hurdles exist, many first-time homebuyers are making their dreams of homeownership come true by being flexible and creative. If you’re tired of paying sky-high rent and would love to own your own home instead, the following tips can help you achieve homeownership.
Know Your Credit Score and Research Your Options
Before you begin saving for a house, it’s important you know your credit score and what the minimum credit score lenders will accept is. You should find out what programs (if any) you qualify for to help with things like the down payment and the interest rate. Many lenders have first-time homebuyer programs that lower both.
Make Enough Money to Save Money
While you might not have to come up with a full 20 percent down, you’ll still likely need a down payment. This means you’ll need to make enough money to pay your bills AND to save money for a new home. Since the average renter household earns just $37,500 a year, which is far less than the average household who recently bought a home ($75,000/yr.), it can be difficult to save for a home, much less afford to pay for it after buying it.
Be Creative When Coming Up with the Down Payment
Many first-time homebuyers agree that coming up with the down payment is the biggest hurdle. You may or may not need to come up with a full 20 percent for the down payment, however. In many cases, you can put down less but then take out private mortgage insurance (PMI). While this is an additional monthly cost, some homebuyers find that it works better for them.
You can also get creative in how you come up with the down payment. While saving for the expense, you can ask close friends and family for loans or gifts to help defray the cost.
Know What You Want but be Flexible, Too
Everyone has an idea of what their dream home should be. Many first-time homebuyers are disappointed when they find that dream home but discover it costs way more than they can afford.
It’s possible to find cheaper homes, but you might have to compromise on a few things. For example, you may have to settle for a longer commute in order to get into a home you can afford. Keep in mind that the more popular an area a home is located, the higher the asking price is likely to be. You may have to look for something a little farther out in order to find a home you can afford.
For many first-time homebuyers, buying a home is riddled with challenging hurdles. Being flexible and creative, however, can help you achieve your dreams of homeownership sooner rather than later.