Less Expensive Ways to Own Your First Home

Owning a home comes at a huge cost and it’s one of the biggest financial commitments you can ever make. Consequently, achieving the milestone can be very difficult and frustrating, especially for first-time home buyers. However, there are ways to bring the cost down to suit your financial situation. Let’s look at some less expensive ways to own your first home.

Ways to finance your first home

As a potential homebuyer, there are several things to consider when purchasing your first home. One of the most important considerations to make is how to finance the home. You have two main options to finance your first home. You can make a cash payment or purchase through mortgage financing. Each method of purchase has its pros and cons.

Cash payment

Paying cash for your home means being able to offer cash for the home without any loan component. It comes with a lot of leverage including giving you an edge in a competitive market, having bargaining power, avoiding the huge interest on mortgage loans, and having a smooth transaction process. However, several considerations are needed before reaching such a decision.

• Financial situation: You need to consider its effects on your finances and whether the decision can throw it out of gear or remain stable. Will it affect your long-term financial goals, emergency funds, and other obligations? If not, then you can go ahead.
• Affordability: Do you have enough safe funds for such an expensive transaction? With this, you need to consider the real cost of a home including all the compulsory and optional expenses associated with owning a home.
• Opportunity cost: will buying a home with cash offer a better return on investment (ROI) compared to investing it elsewhere? If you were to invest the money in stocks, bonds, or a business wouldn’t it have given a higher return?

Mortgage Financing

Mortgage home financing is the use of a loan to purchase real estate. With it, a lender offers you money to buy a home and requires you to repay it within a certain period. The loan repayment years are normally between 10 years to 30 years and through monthly deductions. Failure to pay gives the lender the right to repossess the home.

To qualify for a mortgage loan, you need to meet several criteria including having a good credit score, a better debt-to-income ratio, a consistent source of income and employment, and making a down payment. Mortgage loans come with several advantages including

Easy way to own a home: Using a mortgage enables you to own a home without having to wait until you’ve saved enough funds to pay in cash.

Offers financial leverage: Instead of purchasing a home with your life saving, you can instead use a mortgage loan. this enables you to invest your funds into something that brings higher returns.

Building equity: through your monthly mortgage payments, you build equity in your property over time. Your equity can be used for future investments or get a home equity loan.

So, now that you know how to finance your first home, let’s go through some of the less expensive ways to own a home.

Less expensive ways to buy a home

Go for a small home

We all dream of living in a big and luxurious home. However, as a first-time home buyer with little funds, go for a small home. You can choose between buying a condominium or a modest house, which comes at an affordable cost.

Consider government programs

Governments have various affordable home projects for first-time home buyers. These programs offer subsidized homes or come with lower interest rates or down payment. Explore such opportunities in your state to have access to a less expensive home.

Shared ownership

Instead of buying a home alone, why don’t you consider joining hands with other individuals or families to make the purchase? Shared ownership is offered for corporative or councils and allows you to buy a percentage of a property. With this, you share the home and all the expenses that come with it.

Foreclosure homes

Another way to own a less expensive home is to look for a foreclosure or distressed home. Such homes are often sold at a lower price than the market value. The property may require some maintenance work, but it’s worth the investment.  

Rent to own

With rent to own, you can rent the property with an option to buy. You may have a predetermined price valid within a specific period. With this, you can plan your finances to include your dream to own the home one day. It also comes at an affordable cost.

Have a home warranty

The true cost of owning a home is not just about buying the house. There is more to it including compulsory and optional costs. Compulsory costs include property taxes, utilities, and maintenance costs among others.

When it comes to maintenance costs, one way to reduce the expenses is through the optional cost of buying a home warranty. A home warranty is a service contract between a company and a homeowner. The contract covers the cost of maintaining/replacing household systems or appliances throughout the contracted period. This saves you from unplanned and expensive repair and replacement of home appliances and systems when they break down.

So, after purchasing your dream home Montana home, it is advisable to protect all your high-value home appliances with a home warranty. This is because “repairing your home appliances in Montana can be very expensive,” says an appliance and system technician in Montana. He, however, noted that “with a Montana new home warranty, homeowners can have all covered appliances and system repaired or replaced at no or very little cost.” “This can give homeowners a sigh of relief in case of any breakdown,” he added.

Conclusion

Owning a home gives you some peace of mind from nagging and difficult landlords, aside from offering you the security and privacy you need. Don’t wait until you have a huge fund to purchase your first home. Start small by buying a small and affordable home or having joint ownership. Don’t forget to get a home warranty after buying your first home. These and all the above offer a less expensive way to own a home.