If you’re like most renters, you often feel trapped within the walls of a house or apartment that never quite feels like yours, where you’re not even permitted to bang in a nail or two without a hassle.
If you dream about no longer making your landlord rich by throwing away your money on rent, you’re not alone. It’s a dream we all share, to start building equity in a house we can customize and truly call our own.
However, the reality of your situation is more likely that you feel stuck in the renter’s rut with no way of rising up out of it and owning your own home in sight.
The truth is, there are some little-known facts that can help you climb out of the renter’s rut and upgrade your status from renter to homeowner. It doesn’t matter how long you’ve been renting, or how insurmountable your financial situation may seem; with the following information, you will learn how stop feeling trapped, and how to:
- save for a down payment
- stop lining your landlord’s pockets
- stop wasting thousands of dollars on rent every year
The problem keeping most renters from taking the leap into home ownership isn’t the ability to meet a monthly payment. Most renters are well accustomed to meeting the monthly obligation of rent already and would have little to no problem meeting their monthly mortgage payment if they chose a home within their budget.
Your true problem is likely coming up with enough of a down payment for a home that you can call your own. For many renters, just the idea of how long it would take them to save enough for even the minimum down payment on the most modest home is daunting enough to give up the dream forever.
But, saving for this lump sum doesn’t have to be as difficult as it may seem at the outset.
Several Little-Known Facts That Can Help You Buy Your First Home
1. You can buy a home with much less down than you probably think
There are numerous local and federal government programs, such as those for first time buyers, to help people enter the housing market. Make sure your real estate agent is informed and knowledgeable in the area of buyer assistance programs and is willing to help you explore all your options.
2. Your lender can help with down payment and closing costs
Even if you lack the cash on hand for a down payment, if you are debt free, and own any assets free and clear, such as a car, for example, your lending institution may be able and willing to finance the down payment, or even assist with closing or inspection costs on your home by securing it against your assets.
3. A seller may be able to help you buy and finance your home.
Some sellers may be willing to hold a second mortgage for you as a “seller take-back”. In this case, the seller becomes your lending institution. Instead of paying this seller a lump-sum full amount for the home, you pay monthly mortgage installments to the seller, who retains the mortgage on your home until it is paid off.
4. You may be able to build a cash down payment without going into debt
By borrowing money for certain investments to a specified level, such as ETFs, you may be able to generate a significant tax refund, which you can then use as a down payment. While the money borrowed for these investments is still technically a loan, the monthly payment can be small, and the money invested in both home and investment will be yours in the end.
5. You can still buy a home even if you have a low credit rating
A low credit score doesn’t have to shut you out of the market. If you can come up with more than the minimum down payment, or can secure a loan with other equity, many lending institutions will be more willing to consider you for a mortgage. Alternatively, a seller take-back mortgage could also help you if your credit rating is a significant factor keeping you from buying a home.
6. You may still be preapproved for a home loan, even with little to no funds for a down payment
You can and should, see about getting preapproved for a home loan before you go home shopping, even if you do not have a down payment prepared. Preapproval is an easy process and can even be done over the phone. It can give you peace of mind when shopping for your home. Mortgage experts can obtain written preapproval for you at no cost and no obligation.
More than just a verbal approval from your lending institution, a written preapproval is as good as money in the bank. It entails a completed credit application, and a certificate which guarantees you a mortgage to a specified limit when you find the home you’re looking for.
If you choose to go this route, deal only with a professional who specializes in mortgages. Enlisting and choosing a competent real estate financing professional may mean the difference between being granted a mortgage, and being stuck in the renter’s rut forever, just for lack of a down payment.
A conversation with a mortgage expert costs nothing and does not obligate you in any way. You have nothing to lose, and so much to gain by enlisting an expert to help you learn about the numerous ways you can afford to buy a home.
Taking the monumental step out of the renter’s rut and into home ownership is too significant to go it alone. Take a few minutes out of your day to explore your options and discuss your housing needs with an expert, and you will be on your way to stop throwing thousands of dollars away every year and start building equity in a home you can finally call your own.