So, you’ve decided to get into the market, whatever your situation, renting, leaving home, finding a new city, you will probably need a place to live. Maybe you aren’t looking to rent this time? How do you enter the market with limited finances? We will take a look at a few of your options below! This is by no means all encompassing or cut and dry, your situation may differ, but these are just some quick ideas for you.
There is no silver bullet to affording a home, it is a lot of little things that will add up in the end.
Think smaller; Rome wasn’t built in a day, your dream home probably won’t be either. There is also something liberating about a smaller space, less to clean, less to keep warm or cool, and therefore, less to pay for. There are a lot of great 1 or 2 bedroom options out there, usually they will come as part of a condominium, so those fees are automatically used for some insurance, improvements, and utilities, potentially saving you some money.
What do you need in a Condo? Try to avoid condos that offer bells and whistles, pools and gyms are expensive to maintain, so your fees will be higher as a result. Make sure you know exactly what your condo fees cover as well, if they are suspiciously low, make sure you review the condo docs and/or get a condo document review. Maybe the condo doesn’t cover exterior maintenance, and that is where they found cost savings?
Saving Up:
The Latte Factor; Hasn’t been relevant in some time, assuming you have a large latte from the Seattle Company every day, that costs $6 a day, roughly $2,100 a year. For a down payment alone, you need 5%, let’s assume you are looking at a $250K condo, your down payment needs to be $12,500, plus closing costs. You’d have to go nearly 6 years without your traditional morning latte to work. However, constantly eating your meals out will tank your ability to purchase, best case scenario you’re spending $10 a meal, that $10-$30 a day is better spent grabbing ingredients for meals. All that being said, save where you can, and support a local coffee roaster for $18 for a 454g bag of coffee that will last you 2 weeks.
Staying home for as long as you can: Assuming your family doesn’t charge you rent, or if they do give you a good deal, you are going to save a lot of money. Put the money that you’d be otherwise spending on rent into savings for your down payment.
Chat with your bank, maybe pitch that money you’re saving from not eating out into a savings account. A financial advisor is going to be able to help you out, usually, your bank will allow you to chat with one for free. Financial advisors at banks are more like financial salespeople, they are going to try to get you into an account, which depending on your situation can be a good idea. If you want to go to an outside-of-the-bank advisor, you will have to pay for a chat and advice, but they may not try to sell you something.
Close Friends or Partners: Got someone you want to move in with? This might be a great reason to do just that, pool your resources to nab a slightly larger place to accommodate you both. It may not be best to have you both on as purchasers, depending on financial situation, credit scores, etc. One of you may be better to be the purchaser, and the other, the tenant. Basically renting out a room to your bestie.
No Money Down Mortgages: These do not exist anymore, they were banned in 2008, I suggest reading up on the 2008 Financial Crisis for why. Why did I mention them if they aren’t a thing? Because if I don’t mention it, someone may give you outdated information about them.
Will all of these tips work for you? Probably not, everyone has a different situation going on, so I won’t pretend that it’s going to be all peaches and unicorns saving up for your first place, you may have to give up on a few hobbies or luxuries to help this next step along. No matter your situation, there is help and advice out there that will work for you, it is up to you to take on that next step.
