Broaden Your Financing Options: Hacks for Homebuyers
If you’re in the market for a new house but don’t like your financing options, you may be happy to hear that there are other, less conventional means that can help you make a purchase. Traditional financing may suit the needs of most buyers, but it’s not the only way to go. Check out the following homebuying “hacks” if you’re looking for a different kind of deal.
Buying for Less
Most homebuyers get qualified for financing ahead of time and end up spending every penny of that amount. However, sometimes it makes sense to spend less instead of reaching for the top rung of the ladder. Don’t forget that houses almost always cost more than their list price due to wear and tear, ongoing maintenance, emergencies, etc. Maxing out your monthly mortgage budget can come back to bite you (and it often does). Pay less than you can afford and you’ll be in a better position to handle the ongoing expense of home ownership.
Of course, that doesn’t mean you have to settle for a run-down property that requires a lot of work. Be patient and watch for a house that’s been on the market for a long time, one that’s in an area where you want to live. You may find a property that’s not getting a lot of attention for a reason you could live with (like not enough yard space, or no attached garage). Getting a house for less means you’ll be better able to afford any necessary upgrades later on.
Offsetting Your Costs
People who live in desirable destinations, such as San Francisco or Anaheim, have a unique opportunity to offset the cost of homeownership. One option is to rent out a room — or rooms — in your house to vacationers looking for a good deal on accommodations located near attractions. For example, Turnkey points out that vacationers will often gravitate to rental properties located near popular destinations such as the beach, Disneyland, and Knott’s Berry Farm. You can then take this income and put it toward the mortgage payment or to make improvements that will increase your home’s value. Online rental platforms are excellent business tools because they promote your house to vacation renters and help you earn extra income.
Do Down Payments Differently
It used to be a hard-and-fast rule of real estate that buyers need to come up with a 20 percent down payment. But let’s face it: 20 percent is a huge chunk of change for a lot of people — it can be out of the question for first-time buyers. Do your research and find out the average down payment in your community. You might be able to get the deal you want by putting down less.
Down Payment Alternatives
Don’t give up on buying a home because you can’t come up with a down payment. There are loan options through the US Department of Agriculture, the Federal Housing Administration, and the Veterans Administration, which offer no-down-payment, or low-down-payment, mortgages if your credit number is at least 500.
Did you know that you can share home equity with an investor? It works like this: You and your partner investor combine forces and put down a healthy down payment, and you live in the property for an agreed-upon number of years. At the end of that period, you either buy your partner out or sell the property and split the profits. Of course, equity sharing means you’re not the sole owner, but it does give you added financial clout up front.
Sometimes, broadening your financial perspective can bring the property you want within your grasp. Financing through traditional means can restrict your options or saddle you with a mortgage that’s beyond your means, so explore other avenues available to you.
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