Are you interested in buying a home but unsure if you can afford it? It may surprise you that getting an affordable mortgage isn’t comparable to mission impossible. With the right information, you can enter the real estate market with confidence.
Stick to What You Can Afford
An affordable mortgage shouldn’t exhaust more than 28 percent of your gross monthly income. This is very practical advice, but casting it aside can be tempting. It’s difficult to release dreams of the perfect house. Yet, failure to accept financial limitations could lead to problems down the road. Professionals, like those at Assurance Financial Group, know that part of the journey is prioritizing needs over wants. This may require compromises like choosing a smaller home. Another option includes taking on a fixer-upper for a discounted price. Limited funds to renovate can be alleviated through a mortgage that combines purchase and repair costs.
Assess Down Payment Options
The great news is that mortgages requiring little to no down payment exist in today’s market. The USDA loan enables a home purchase with no money down. Likewise, the VA loan offers 100 percent financing for members of the US military and surviving spouses. New homeowners can expect to save money because mortgage insurance is not included with a VA loan. For a low down payment option, FHA loans require a down payment of 3.5 percent. The down payment can comprise entirely of gift funds. You need a 3 percent down payment for the HomeReadyTM mortgage, which permits flexible sources for closing costs and lower mortgage insurance. An added benefit is that income from all working household members or renters/boarders can be used to qualify.
Be Open to Unconventional Strategies
So maybe your dream of homeownership doesn’t include living with family or friends. Sometimes the road to success may require some thinking outside the box. Co-buying allows family members or friends to pool resources to create an affordable mortgage. The growing popularity of co-buying has caused builders to construct more homes that accommodate the need for flexible layouts.
Parents can assist adult children beyond providing down payment help. Using a reverse mortgage, the parent can purchase a home for a son or daughter. Then the parent and child can enter into a mortgage agreement creating terms that benefit both parties. If you are open and willing to be creative, an affordable mortgage is definitely possible.
About the author: Rachelle Wilber is a freelance writer living in the San Diego, California area. She graduated from San Diego State University with her Bachelor’s Degree in Journalism and Media Studies. She tries to find an interest in all topics and themes, which prompts her writing. When she isn’t on her porch writing in the sun, you can find her shopping, at the beach, or at the gym. Follow her on Twitter and Facebook.