Home ownership is part of the American dream, but it is not the given it once was for most Americans. A fall in wages and a rise in house prices has put the squeeze on those looking to own a home. The percentage of Americans aged between 25 and 44 who own homes has fallen in the last couple of decades, with it falling by 15% between 1980 and 2000. It picked up during the 2001 to 2005 housing boom before falling again after the Great Recession.
The down payment for a house is somewhere between 0% and 20% of the home's entire value, which in the most expensive areas could be up to $200,000! However, in less expensive areas it is in no way impossible to raise that kind of money and there are plenty of ways to save money in order to put aside enough to afford the down payment.
Improve your credit score
The better your credit rating, the cheaper the interest will be on your mortgage loan. There are ways of improving your score quickly. First take a look at your credit report and identify the negative accounts. Then pay off any outstanding credit card balances and get in touch with the credit card companies to ask if they will remove the negative accounts once you have paid off the balance. Dispute all of the negative accounts to try and get them removed. Finally, get added as an authorized user on a family member or friend's credit card.
Think about when to buy
It seems crazy but the time of year when you buy a home can have a huge impact on its price. Most people are looking to buy a home during the spring and summer months so looking in winter can save you a significant amount on the asking price – as much as 8.45% on average.
Consider homes that need some work
When looking for a home, you shouldn't just go for the homes that amaze you. See if there are any homes that are a bit rough around the edges but have potential. Those homes are going to be substantially cheaper to buy and can be potentially really nice, providing you are willing to put the necessary effort in to refurbish them. The cost of bringing a home up to modern standards can be much less than the difference in price between it and a finished property. It can also be very satisfying to renovate a house and make it into a lovely home for you and your family.
Use an experienced real estate agent
When you're house shopping, it's important to make sure you enlist the help of a trusted and local real estate agent. They are professionals with plenty of experience of buying and selling houses, so they will know how to help you avoid unnecessary fees and expenses. Remember that the home seller is the one who has to pay commission to the real estate agent, not you. They are expert negotiators and will help you pay the fairest price for your home.
Think carefully about your mortgage loan
Depending on the location of the home and other factors, you might be able to qualify for a cheaper loan. If you are a veteran, then you could qualify for a Veterans Affairs (VA) loan which means that do not have to provide a down payment as well as not having to pay mortgage loan insurance. If the home you are buying is in a rural area, then the Department of Agriculture could help you out with a USDA loan – again this removes the down payment requirement while also reducing the mortgage loan insurance amount to just 0.35% of the total amount of the loan.
Once you have bought the home, you will be paying your mortgage every month to eventually own it outright. A common expense for homeowners is repairs and replacing appliances and equipment. Good home warranty will cover your expenses so that you do not need to worry when things break down. Make sure that you find out as much warranty information as possible before choosing a provider. Also, consider how your location can make the difference, as home warranty in Arizona may be cheaper than in Florida.
Buying a home isn't easy nowadays but there are ways to make it cheaper for you and your family. There are methods to reduce the price you pay, the mortgage loan insurance amount and the expense of running a home.