Personal Finance Hacks for Homebuyers
If you’re in the market to buy a house but don’t like doing things like everyone else, try hacking your way to your goals. Conventional methods exist for a reason — they have been proven to work time and time again. They’re not the only way to operate, though, so we’re turning conventional wisdom on its head and giving you a few hacks you may not be familiar with that just might make a difference. Here’s a look at a few options.
Down Payment Options
First, do your research. The average down payment on a home mortgage loan in the US is about 11 percent — much lower than the traditional 20 percent we have known for so long. Find out what the average down payment is in your area of the country so you know if the percentage you have in mind is in the ballpark.
If you don’t think you have enough money saved for a down payment but you still want to buy a home, you do have options. Loans from the USDA (U.S. Department of Agriculture) and the VA (Veterans Administration) offer no-down-payment mortgages, while the FHA (Federal Housing Administration) provides low-down-payment options if you have a credit score of at least 500.
Save on Taxes
If you do end up buying your home for less than it appraised for, you might be in for a tax break. Take your information to your county tax assessor, and they can lower your taxes to match the purchase price. This just might save you some money every year.
Buy Less Than You Can Afford
If you are a prepared home-shopper, you will already know how much house you can afford. Don’t forget, though, that houses always cost more than you think in terms of maintenance and repairs, so you don’t want to max out your mortgage payment budget. Stay a little below what you think you can afford to give yourself some breathing room for when the hot water heater dies or your washer leaks all over the floor.
Buy a Home Below Its Listing Price
You should also look up the percentage of homes that sell under their listing price in your area. This number likely won’t be high — it’s 4.2 percent of homes in Bonita Springs, Florida, for instance — but it will give you some idea if buying below value is even possible.
Here’s one strategy for buying a home below its listed price: look for a home in a neighborhood where you want to live that has been on the market for some time. There may be a reason it hasn’t sold that is not a deal-breaker for you. For instance, maybe it’s too cluttered, has too much furniture in the house, or looks too dark. If you have vision, you can see opportunity. Because the house has been on the market for so long, you will likely be able to get it below the listed price. A few minor renovations later and you will have instant equity.
If you’re having trouble coming up with a down payment and the options listed above don’t work, consider the concept of sharing equity in a home with an investor. You and the investor would pool your money for a down payment and then you would live in the home for an agreed number of years. At the end of that time, you would either buy out the investor or sell the house and divide the profits with the investor. It may take some time to find just the right person to invest, but if you choose the right house, it could lead to a good return on their investment.
Finances don’t have to be a barrier to buying a home. With the right strategy and a willingness to think differently, you can still find some great deals. Don’t be boxed in by conventional thinking — try a few of these personal finance hacks to end up in the house of your dreams.
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This guest article is provided by Brittany Fisher. Brittany is a professional CPA and loves to share her knowledge about taxes, personal finance, and general financial literacy with others. You can find even more resources on her website at FinanciallyWell.info