If you’re interested in entering the housing market but haven’t found success via traditional financing methods, you may be encouraged to know that there are options to aid people who require an alternative approach. Consider these financial “hacks” as you contemplate their validity and usefulness in regard to your situation.
The Dreaded Down Payment
The down payment, which tradition has long put at 20 percent, has discouraged many potential homebuyers from pursuing their dream home. In fact, the average down payment these days is more like 11 percent, which should be good news for a great many Americans, especially those who are in the market for the first time. It’s worth your while to do some research in the area you want to live. You could find out, based on the average down payment for homes there, that a down payment is within your capabilities after all.
If you still don’t think you have enough, there might be help waiting in the form of government assistance. US Department of Agriculture and Veterans Administration loans make available mortgages with no down payments, and the Federal Housing Administration offers low-down-payment loans as long as your credit score is at least 500.
Come in Low
Most homebuyers pay every bit of what they can afford when purchasing a home, particularly if it’s a property they’ve fallen in love with. It’s a typical approach, but it can leave you without much in the way of reserve funding when something goes wrong, like a flooded basement or a major appliance that suddenly decides to call it quits. Try spending a bit below what you believe you can afford and leave yourself with some cushion for when the unexpected does happen.
A Tax Break
There are also hacks that can help you get a tax break. If you buy a home for less than it was appraised, ask the county tax assessor about lowering your taxes to match the purchase price, which will save you some money year to year.
Under List Price
Another good way to save some bucks is to look for homes in an area where the percentage of those that sell for less than their listing price is comparatively high. That gives you an opportunity to get something of a bargain, depending on the area and the kind of house you’re looking for. You might also look for homes that have been on the market for longer than usual and find out what the problem is. You could discover that the “problem” is something that is really no problem for you. People have all kinds of reasons for passing on a house, and some of them just come down to personality, quirks, or an overly picky buyer.
For example, it could be a property without a lot of natural light, or a maybe it only has a one-car garage instead of two. Whatever the reason, determine whether it’s something you can live with or make an upgrade later on that will resolve the problem. This can be an excellent approach if you’re looking for a good price and an opportunity to create equity with some improvements.
Sometimes, purchasing a house you love just requires some outside-the-box thinking and a willingness to try something a little offbeat. There’s no rule that says you have to do everything a realtor advises or approach financing in the traditional manner. Sometimes, there’s a way that just works better for your situation.
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