Rising rents can make it difficult for aspiring homebuyers to save for a downpayment. Last year, rents climbed 3.2% according to realtor.com. This could continue for years and is out of the renter’s control.
So what’s a renter, who really wants to become a homeowner, to do?
Save everywhere, plan and research.
• Cut back on unnecessary expenses like lunches out during the work week and expensive coffee. These weekly savings alone will surprise you.
• Volunteer to do some work around the property in exchange for a reduced rent (rake, mow.)
• Set up some automatic savings plan to deposit money in an account for a downpayment. You can start with just $50 a month and will hardly miss it while it starts to accumulate.
• Understand that the current interest rates are historically low and how they affect your mortgage payment. Not only does the payment go up, but you also can’t afford as much.
• Consider asking the Bank of Mom and Dad for temporary assistance with a downpayment.
• Explore low downpayment programs to take advantage of today’s current low interest rates. Some programs allow just 3% down, with some education classes.
Many buyers mistakingly think that 20% down is required and also that perfect credit is necessary. There are other ways to do it. And while you can learn a lot online, it is best to talk to a real person who can listen to your individual situation and provide options. Ask some friends or family members for recommendations on lenders and real estate agents. This should help you feel comfortable with them during this important process.
Save and watch your budget which is a good habit to learn in preparation to becoming a homebuyer.
If you need additional information to determine if buying is better than renting for you, please see here.
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