The Frugal Approach to Buying a Home
Most Americans long for a home to call their own. Renting can seem draining as you don’t get much in return for your payments. Well, the following tips will help you buy a house with a frugal budget.
The Fixer-Upper Option
One popular way to get a house on a budget is to buy a fixer-upper. These houses require some work, which is the reason you can get them at a low price. You’ve probably seen folks buying fixer-uppers on TV and fixing them up. The benefit is how cheap they can be, but keep in mind what you’ll have to deal with. Depending on your budget, it might take months or years before you can afford to renovate. Get various inspections so that you can prepare for the costs.
Past the Price Tag
Whether you get a fixer-upper home or a house that needs minor updates, pay attention to what you need to do right away. For example, you might need to install a reverse osmosis system or a new water heater. All updates need to be considered before you submit an offer. Sure, the price tag might look appealing to you, but that’s not the only thing you have to worry about. Make sure you consider the costs of updates, repairs, or improvements to stay within your budget.
Owner Financed Option
Sometimes, you can get a deal with an owner-financed house. You get to own the house and skip the banks that might deny you a loan. This is done directly with the owner. There are some drawbacks to contracts like this. For one, your interest rate might be higher than average, but you will be a homeowner. The seller may work with you so that the initial costs fall within your budget. Be sure to have various inspections done on the home to catch hidden problems.
Rent-to-Own
Another thing to consider is opting for a rent-to-own home. In essence, the owner still owns the house you’re thinking of buying, but you are renting the house from the owner with the option to buy at some point. You get to lock in the price of the home. You can live in this house and test it out while you’re paying rent. A portion of the rent goes towards the purchase of the house. After a while, you’re given a chance to buy the house, and hopefully, by then you can buy it if you want it.
Get Help
If you’re looking for a low-cost option because of your income or a low credit score, you might qualify for a bit of assistance. You could get your house with an FHA loan, which doesn’t require too much from you. You may be eligible for the loan and not have to buy a home with issues. You still need to work on your credit to qualify for this type of loan. Shoot for a credit score of 580 or higher. A 3.5% down payment is required, considerably less than what you would typically have to come up with.
These are some things you can do to be a homeowner, even with a tight budget. If you have the time, try to create another stream of income to expand your options.
