It can be quite a challenge to buy your first home! The downpayment alone may seem insurmountable, but you don’t want to rent forever. Money that you pay to a landlord is gone forever. Money that you pay to a mortgage, however, builds your equity and therefore your wealth. Today we are going to be providing you with 5 tips to help you make your dream to buy your first home a reality.
Tip #1: Save up for a higher downpayment
This is the most difficult tip to help you buy your first home. Especially when the economy is so crazy. The higher your downpayment though, the lower your monthly payments will be. The lower your monthly payments, the more affordable it will be to buy your first home. Having less than a 20% downpayment will require you to pay a monthly PMI (Private Mortgage Insurance) fee, increasing your monthly payment. Believe me, I know how challenging it is to save up 20% with home prices being what they are, but good things come to those who wait.
Here are some ways that can help you save some extra money to get to your 20% faster.
- Limit your number of subscriptions
- Make coffee at home rather than going to Starbucks
- Cook your own meals instead of going to a restaurant
- If you don’t want to cook, pick up your food and take it home. That avoids paying a tip and Doordash delivery fees.
- Find a cheaper apartment. Don’t pick somewhere sketchy, but perhaps a place that is a little dated and with fewer amenities. This will also help motivate you to get out a bit faster. LOL
- Get a car with a lower payment or pay cash for a car to avoid a monthly payment.
- Try taking a more affordable vacation somewhere and put the money you saved into your downpayment fund.
All these things can really add up. Then once you have your home with reasonable payment, you can start some of these fun things again.
Tip #2: Look into downpayment assistance programs
Did you know that there are downpayment assistance programs available to first-time home buyers to help them buy their first home? These programs will help you to save up for your downpayment even faster. Each state has different programs so be sure to check out what is available in your state.
Tip #3: Shop around with lenders
Lenders are not all the same. It is important to shop around for lenders before you start looking at a home. Once you are under contract there won’t be time to shop around without risking your deadlines and therefore the contract itself. When you do look at lenders, don’t just look at their rates online. Call them up and ask them about their different loan options. They can help you find one that will work best for you. Many also have incentive programs that you can take advantage of.
Tip #4: Consider buying a fixer-upper
You probably imagined that when you were ready to buy your first home, it would be a beautiful home worthy of an HGTV show. Homes like these go for top dollar resulting in a higher payment and downpayment. If you are willing to wait longer to save up for a home like that, then by all means do it. However, if you want to get out of your apartment as quickly as possible, consider buying a fixer-upper. The important thing to remember about this though is to make sure the necessary work is something within your capabilities. Don’t just assume that you can YouTube how to do things. Especially when it comes to things like electrical or structural work! However, homes that are simply dated offer incredible opportunities because they sell for less and give you the chance to create more equity faster. Things like paint, wallpaper that needs to be removed, and flooring are all easy to do yourself and have a big impact. With some hard work, you can have a beautiful home and lower payments.
Tip #5 Make an all-inclusive budget
This is the most important tip to buy your first home. Creating a budget for your first home requires more than just your principal and interest payments on your mortgage. Don’t forget to include things like taxes and insurance (which often are included in your mortgage payment and go into an escrow fund). Be sure to also leave room in your budget for repairs. There is no landlord to fix things when you own your own home. You are responsible for a leaky roof, a furnace that breaks down on the coldest day of the year, and any landscaping work that needs to be done. These can be major expenses and need to be budgeted for properly in order to maintain your home and its value.
With time, research, and due diligence, you can make your dream to buy your first home come true!
Thanks for reading!