Many finance and real estate experts agree that buying a home as soon as possible is a good money move. Unlike buying a car, which loses value as soon as you drive away from the lot, houses generally increase in value over time. In other words, buying a house quickly is a good investment.
Unfortunately, affording a house can take many years of hard work and frugal savings. Some young earners don’t even bother looking into the housing market, since they believe their early-career salaries and student debt will bar them from purchasing a home.
However, there are ways to break into the real estate market early. With smart spending and saving strategies, you might be able to own a home much quicker than you originally hoped. Use these tips to find and buy an affordable home quickly:
1. Start Saving Early
The early bird gets the worm in the real estate world. The sooner you start saving for a down payment, the more you’ll be able to offer when you find the perfect home. Down payments are often pretty substantial, and you won’t be able to save enough by sending a few paychecks to your savings account every now and then. Establish a fixed amount you can contribute to down payment savings every month, and stick to it. The earlier you start saving, the earlier you can start buying, and the longer you’ll have for your investment to appreciate. Nerd Wallet offers a down payment calculator to help new homebuyers get started. Also, it’s always a good idea to talk to close friends and family members who have recently purchased a home. Roughly 40% of property buyers found their real estate agent through a referral from a family member or a close friend.
2. Explore Your Financing Options
Many inexperienced home buyers believe they won’t qualify for a mortgage due to their bad credit, lack of credit, or other financial issues. However, there are a variety of loan types available to buyers with different financial situations. For example, an FHA loan requires a credit score of only 580, refinancing up to 97.75% of your primary home’s value. With an FHA loan, you can buy a home with as little as 3.5% down. Look into pre-qualification and other finacial advice to understand all of your options.
3. Explore Fixer-Upper Options
Roughly 34% of recent buyers want to avoid renovations and problems with plumbing or electricity, which means that homes with such problems are put on the market at discounted prices. Keep an eye out for homes that might not be perfect, but that have potential for affordable repairs and renovation. A less-than-perfect home might save you money and time when buying. Ask a professional before buying a fixer to make sure that structural problems can be repaired fairly cheaply. As a bonus, buying a fixer means you can make the home unique to your own tastes.
4. Consider Buying Less House than You Can Afford
Sure, you may qualify for enough of a loan to get a bigger house. But just because you can qualify for higher amount, doesn’t mean you should go all out. Get a home that fulfills your needs and saves you some money. (We did this – and it definitely was a good idea!) There are a lot of hidden expenses that come with buying homes, especially if you’re selling your current one. In the United States, it takes an average of $15,200 just to sell your current house. Remember that more house means more space to heat (or cool), more to take care of (and clean), and more to repair. And if you suddenly find yourself with less income, you are less likely to keep up with the bills. Remember, you can always move “up” sometime in the future.