Blog posted On November 02, 2023
It’s no secret that mortgage rates are on the rise, which makes it more difficult for Americans to purchase homes. While the high-rate environment can be challenging, it doesn’t have to mean your chances of buying a home are non-existent. With some simple tips and tricks in mind, you can stretch your dollars with strategic tactics. If you’re planning on buying a home in this high-rate environment, discover seven of our expert tactics to help your money do more.
7 Tactics for Saving Money
1. Paying Down Debt with Down Payment Money
For most home buyers, it seems logical to use the down payment money to lessen the total mortgage amount borrowed. However, it might make more sense for people who have high amounts of other debt (credit card, loans, car) to use some of the intended down payment money to pay down higher-rate debt. This doesn’t apply to everyone, but it may be helpful for people carrying several debts.
2. Asking the Seller to Reduce the Mortgage Rate
Prospective home buyers can also ask the seller to pay a portion of the buyer’s interest payments upfront, making payments easier for the first couple of years. This strategy can be used to help lessen the impact of high interest rates and make payments more realistic for one to three years after the purchase of the home.
3. Home Buyer Assistance Programs
Prospective home buyers should also look into available home buyer assistance programs which may be provided by the state or local government. Eligibility will depend on the type of program and location, but it’s certainly worth looking into before making a home purchase.
4. Buy the Right House
If you find the right house, don’t wait around for a better rate. People often feel like they should wait for interest rates to come down. However, if rates do fall, more people will enter the market and ultimately drive up the sale price of the home. Refinancing your home’s mortgage later on is always a possibility to consider too.
5. Buy a House that Needs Work
Houses that require some love and care tend to scare some home buyers away, screaming “cost” and “time.” However, buying a fixer-upper can actually help you to save money. If you are patient, working on your home over time or taking a home renovation loan to make improvements is also an option.
Look for flexible options for renovation loans depending on your unique needs. For example, you can purchase and renovate a fixer-upper home all within one loan or take a renovation limited loan to help with small upgrades and fixes. A 203(k) Limited renovation loan could be used to repair fences, replace a roof, or install new kitchen appliances. Small fixes on your home don’t require a big loan!
Speak to a home renovation loan expert today to explore all the available possibilities, including Conventional, government, And Jumbo Loans.
6. Consider a New Construction Home
When buyers hear “new construction” they often don’t think “cost-savings.” However, building a new home can help you save money by avoiding costs associated with unexpected repairs or remodels on existing homes. Since there is a shortage of existing homes on the market, a new construction home can also provide more options when searching for the right home.
Choosing construction financing can help your dream of building a home come true.
7. Renting Out a Portion of Your Home
Sometimes you need to get creative to make your home purchase work! Considering a duplex, triplex, or other multi-family option can provide extra rental income to make the mortgage for your home feasible. Many owners today are purchasing properties where they can live in a portion of a home while renting out the other portion(s).
If you’re curious about one or more of the above solutions, reach out!
Source: Market Watch