Purchasing a home is one of the bigger moments in many people’s lives, whether or not they have purchased on in the past. But with rising home prices and interest rates, it can seem less and less affordable to acquire your own home. There are a few things to consider that can help make owning a new house as affordable as possible:
Think About Your Funding Options
There are sources of funds you could tap to make a home affordable. One option might be to sell your life insurance policy through a life settlement. You have a few options if you are considering going this route, such as a viatical settlement. These can also be ideal for terminally ill patients who need cash right away. Still, the transactions can be complicated, so you can go over a guide on viatical settlement taxation to determine if this is the right option for you.
Consider an Older Home
Another thing to do before applying for a mortgage is think about how much time you have and are willing to dedicate to the upkeep of a home’s needs instead of paying to outsource these tasks. If you don’t mind doing home repairs yourself, you might be able to get a slightly older home in need of some repairs. These houses tend to be priced a little lower than others in the same area. Depending on the age of the house and extent of the necessary repairs, you could qualify for a special type of loan that will take the costs of repairs into account. This can make the repairs a bit more affordable. As you make improvements, you will be building equity, which will allow the value to go up.
Choose a Different Location
Many homebuyers, especially those with kids, want to get something in the right neighborhood. You might want a neighborhood with other families, or you may want to be closer to the school district. However, these more desirable locations can be more expensive than you are able to afford. There are school programs that let you reside outside the district. That allows you to live in an affordable area while still having access to good schools.
Get an Early Inheritance
If your family is willing to help you obtain your home, you might be able to ask for an early inheritance. You will likely need to have the funds in the account for a couple of months, and the giver might need to write a letter that this is a gift and not a loan. Still, if you meet the requirements, you may be able to use the funds for the down payment. Or you could put the funds toward other debt you might have, allowing you to lower your debt-to-income ratio. If you have not received any offers of gifts, think about any relatives who you know you will receive an inheritance from. Then ask if they are willing to give you some of the funds early so you can make your down payment. Your family knows they will be helping you make an investment, and depending on the circumstances, they might even include themselves in the investment strategy.
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Ask me after the crash. Until prices fall about 50% from where they are now, no.
You can also decide if your home is to be a drain on your finances or a partial income stream. A house can help pay for itself in different ways: 1. Rent the garage for dead storage to a classic car collector. 2. Plant a garden and harvest fresh fruit and vegetables. 3. If the lot is fenced you can earn good money renting the yard out by the hour for people who want to exercise their dogs safely. 4. Rent a spare room. This can be very easy and lucrative if you have a bedroom and private bath on the first floor. Replace one window with a French door and you have a private room to rent out long term or Air B and B. 5. If things get really tight and you are alone you can rent the whole house and you live in the first floor bedroom. 6. Rent part of your driveway for parking. 7. Pet sit in your own home, many people don’t want to put Fido in a kennel, they want a family setting.
Fantastic! Thanks for the additional tips, Karen!