Are you considering buying a home but having trouble thinking of how you’re going to afford it? Here are a few strategies and things you need to know to help you on your path toward homeownership.
If you’re renting a property, it’s natural to want to compare your current rent amount to how much your mortgage payment would be if you bought a home. To better calculate this, a good lender can give you what’s called PITI, which stands for principal, interest, taxes, and insurance. This will let you know how much your monthly payment will be when combining all of these expenses.
When you get that number, it may be higher than what your rent amount is. A great thing to do in this case is meet with an accountant to see what your tax breaks will be for purchasing a property and having mortgage insurance. This is something I did myself when I purchased my first property, and the amount ended up being exactly the same as what I was paying for rent.
A common misunderstanding I hear when it comes to purchasing a property is that you have to put down 20% for your down payment. That’s not true—there are certain loan programs out there that will let you buy home with as little as 10% or even 3% down. That’s a huge difference in terms of affordability.
Another thing that can help you when buying a home are seller credits. When you write the offer, you can ask that the seller credit you money back toward your closing costs. This basically keeps as much as $10,000 in your pocket and eliminates all of your closing costs because the seller will cover them.
If you think you won’t be able to qualify for a home loan, you can always have a cosigner. If you have a close friend or family member, for example, you can ask them to be your cosigner so their name would be on the loan along with yours and they would be responsible for it, too.
Lastly, you can always try crowdfunding as a way to purchase a home. Featherthenest.com is a website that is very popular in this regard. If you try crowdfunding, you can set up your own account and ask friends and family to help you save for your first home.
Several years ago, a mentor once told me that they never look at something and say, “I can’t do that.” Instead, they always look at something and ask “How can I do that?” If you start thinking this way, your mind will go into solution mode. From there, you’ll be on your way to homeownership in no time.
If you have any questions about this topic or need help purchasing your first property, please don’t hesitate to reach out to us so we can assist you. We’d be happy to help!