Tis the season of savings—or so they say. While it’s true that some of the best retail deals of the year are happening right now, some would argue that this is the season of spending. As such, you might be inclined to believe that buying a house is completely out of the question at this time of year, but think again! Homeownership is possible and can be affordable for people of all kinds of financial backgrounds. Take a look at these five tips for making a home purchase affordable and see if your dream of homeownership is possible this holiday season.
1. Consider a different neighborhood. So you’ve got your dream neighborhood picked out and you can’t stop thinking about it. You can’t imagine living anywhere else. You’re convinced that it’s perfect in every way—except for the price tag. When you’re that invested in a particular neighborhood, it’s tempting to enter a bidding war where you either agree to pay a price that’s way over your budget or have to walk away empty-handed. If this sounds like you, you may want to consider searching for a home in a less expensive neighborhood.
This is where making homeownership affordable requires give and take. Those neighborhoods a little farther from downtown? Don’t write them off completely. You just might have to consider houses in other neighborhoods where location isn’t in such high demand. Although farther from your target location, these areas may just offer more land and a bigger house at a better value.
2. Save up for amenities. Amenities make for a great place to start when you’re making homeownership affordable for you. If considering a different neighborhood isn’t an option, it might be time to dial it back on your must-haves list. Expand your opinion on what’s acceptable. You may need to refocus your search for “the perfect home” to a search for a great home that has just what you need.
A great home doesn’t have to come with all the latest and greatest features. You may have to be willing to save up and make gradual improvements after you purchase the home. Some characteristics of residential properties that may increase the value of the home include brand new appliances, a finished basement, renovated kitchen and bathroom, new floors (carpet or hardwood), a big yard, and finished landscaping. Look for houses that don’t have these features and you’ll usually find that they’re more affordable.
3. Lower your utility bills. Let’s face it: Owning a home is expensive. Typical costs include your monthly mortgage payment, a down payment, mortgage insurance, property taxes, and utility bills that are usually higher than those for renters. This list doesn’t even cover all of the costs that some homeowners pay. And don’t forget that, once you buy a house, you give up the convenience of free maintenance that you had as a renter. All repair bills are now in the hands of your financial responsibility.
Nevertheless, there are plenty of options available that help you cut down the costs. Many states and utility companies have programs that help low-income residents pay for utility services. These programs include anything from energy and utility assistance to housing initiatives, and more. One example of this is AT&T’s Access program, which provides home internet service to low-income households—some packages are as low as $5 a month! Get this: Some states even provide cell phones for low-income residents. It just goes to show that it’s possible to make homeownership affordable and income-qualified assistance programs for utility bills can help.
4. Check out FHA loans. Backed by the Federal Housing Administration (FHA), these loans are perfect for borrowers who are trying to make homeownership affordable. Only 3.5% of the total price of the home is needed for a down payment and borrowers can have a credit score as low as 580 to qualify. FHA loans are more flexible in credit, income, and down payment requirements, making them a secure choice for borrowers who might not qualify for conventional loans.
But, with FHA loans, you have to take the sweet with the sour. These loans require you to pay for two types of mortgage insurance—one is an upfront premium that’s rolled into the mortgage payment and the other is an annual premium that’s broken down into monthly installments. In addition, your desired home must meet minimum property standards and pass an inspection made by an FHA-approved appraiser.
5. Research other government assistance programs. Aside from FHA loans, if you’re on the hunt for affordability, there are many other assistance programs available that are specially made to help low-income residents reach their homeownership dreams. The U.S. Department of Housing and Urban Development (HUD), for example, offers many of these types of government-funded housing programs. Don’t let financial struggles keep you from living in a home that’s suitable for you and your family’s needs.
Don’t believe that homeownership is out of the question this holiday season. If you’re dreaming of owning your own place now or in the near future, take these tips to heart, learn about your options, and find what works best for you.