Financial Hacks for Homebuyers

• September 16, 2022
• realestatelife
• Announcements, Business & Markets, Interest Rates, Politics & Economy, Rates, Real Estate Finance, Updates, Your Real Estate Life

When you’re buying a house, sorting out funding is often more challenging than finding the perfect home. From saving for a down payment to securing financing to managing your obligation long-term, there’s a lot of decision-making to be done. To kick off your research, here are some outside-the-box ideas from Your Real Estate Life / United Mortgage Corporation of America. for paying for your purchase.

Save Creatively

Unless you’re sitting on a ton of cash, you’ll probably need to stash away some savings before becoming a homeowner. To understand how much capital you’ll require, do a deep dive into trends in your desired area. Research standard down payment percentages and pending home sales to see how many are selling below their listing price to gain insight into how much you’ll need to save, and then begin building your nut. Creative ideas for boosting your bankroll include:

• Starting a side hustle like rideshare driving, freelancing, or flipping flea market finds for profit.
• Use round-up savings apps to sweep spare change into your down payment fund.
• Bartering for goods and services to maintain your lifestyle while minimizing spending.

Look Into Alternative Funding

When you’re ready to purchase, look beyond standard bank loans for financing. While taking on a mortgage is the traditional way to buy a home, there are unique options to consider before you make a 30-year loan commitment.

Crowdfunding, private lending, and hard money loans from investors specializing in real estate purchases are alternatives to bank mortgages, and it’s also possible to negotiate an unconventional purchase structure. While many sellers are after the cash infusion that comes from closing the contract, others may be willing to arrange an installment sale and benefit from the resulting long-term passive income. Others might consider a lease-to-own contract, allowing you to build equity through monthly payments until you eventually own the property outright.

Carefully Consider Early Repayment

If you’ve taken on a traditional mortgage and are daunted by forking over monthly payments for decades, it’s understandably tempting to pay off your loan early. Whether you’ve got a few extra dollars each month or you suddenly come into a big chunk of change, your first instinct may be to pay down your principal to reduce the size and length of your commitment.

While this is a smart move for some, weigh the perks and drawbacks before sending more money off to your lender. If you’re carrying other high-interest debt, prioritize paying it off before tackling your low-interest mortgage. It’s also often wiser to use the extra cash to bolster your savings, so you’ll have the liquidity to face unexpected issues like job losses or medical emergencies.

With a rainy day fund in place, assess your long-term goals and decide if you’ll reach them by saving or by earning. Use online calculators to determine how much you’ll need for retirement and to predict mortgage interest savings versus likely investment returns. If you are up for weathering the risk, statistics show that investing rather than reducing your mortgage expenses typically builds a bigger nest egg.

From finding unique ways to save for your down payment to checking into alternative financing to managing funds smartly once you’re in your home, no single fiscal path is right for every homebuyer. Tapping one or more of the hacks discussed here may be untraditional, but they can pave the way to happy and affordable homeownership.

Suzie Wilson
suzie@happierhome.net