It’s difficult for home buyers to navigate the housing market today. Housing prices have increased, a dollar isn’t worth as much, and rent is significantly more expensive than it used to be. How are people today purchasing homes despite these challenging hurdles? With flexibility and financing creativity, buyers are finding unique ways to afford the home of their dreams.
1. Know your credit score and your options.
Before you begin the home buying process, you need to understand your resources. Many Americans aren’t actually aware of what it requires to purchase a home. The first step is to figure out what financing options are available to you. It’s a good idea to figure out what your credit score is, as well as how much you can afford to put down on a home.
2. Make enough money to save.
Renters typically make a lower income than recent homebuyers. Renters generally earn a median income of $37,500 annually, while recent homebuyers have a median household income of $87,500 annually. While there are ways to purchase a home without an income that high, it’s difficult to buy if you make significantly less. Unfortunately, only 29% of Americans bring in that much cash. If you want to buy a home and you have a side hustle, now is the time to work extra hard to save as much money as possible. If you don’t have a side hustle, stash away birthday money, tax returns, and work bonuses until you can comfortable afford a down payment and closing costs.
3. Save enough cash for a down payment.
This is one of the most intimidating parts of buying. Generally, the down payment is the biggest hurdle to purchasing a home. However, you don’t always have to put 20% down. In fact, only a quarter of buyers put 20% down, and more than half of buyers put less than 20% down. Look into your options, and know how much you need to save. Having a reasonable numerical goal will make it easier to envision and achieve that goal.
4. Know what you want, but be flexible.
In order to afford a home, many of today’s buyers are considering locations and homes outside of their wish list. Although single family homes are the ideal that most homebuyers desire, buyers today are considering condos and townhouses so they can afford in their ideal locations. Affordable homes exist, but in popular areas where people most want to live, it’s harder to find cheaper gems. In today’s market, it’s important to know your non-negotiable items and the things you’re willing to be flexible with.