Despite the bad reputation homeownership and home affordability has gotten over the past few years, it’s still part of the ‘dream’. Currently in 2014, there’s a caveat to the dream of whether or not potential buyers will find a home to purchase within their budget. Here are a few savings sacrifices that won’t have a significant effect on your finances and may help you land your new home:
Price: this is the biggest sacrifice you can make because home prices in your area dictate exactly what you’ll be getting for your dollar. But how much of a price sacrifice do you need to make? The rule of thumb is to purchase a home that is 20% less than what the bank tells you that you can afford. By ducking under your max price by 20%, you’re giving your budget some room to breathe,ensuring that you’ll never be in over your head each month.
Cash in the bank: another big sacrifice is liquidity. While you may have to drain your bank account to make the numbers affordable, hitting the 20% down mark immediately lowers your monthly payment with a smaller loan, better interest rate, and no private mortgage insurance (PMI).
Home type: it’s a big sacrifice, but if location and other factors are more important, you may have to make the shift from a single-family home to a condo, townhouse, or duplex. Especially in dense metropolitan areas, single-family homes m
ay not be what is required, while a condo might just get you the address you want with the home affordability you need.Neighbourhood: when purchasing a new home we know it’s all about location, but you may not be able to purchase a home in the hottest neighbourhood within walking distance to the main drag. Even proximity to recreational areas, shopping, and dining may have to be a second priority. Look for a home near transportation, or at least within a short drive, that still allows easy access while keeping you just outside of the priciest areas.
Square footage: the average midsize home is approximately 2,363 square feet. Cutting back on size could put your dream home within reach. Smaller square footage doesn’t always mean being cramped; look for homes with open floor plans and access to outdoor living spaces.
Move-in condition: paying for someone else’s upgrades is a luxury you may just have to sacrifice. The best way to get more home for your money is to find the ‘fixer upper’ that needs some TLC. If you’re trying to keep the bottom line down but can spend some time at your local home improvement store, purchasing the tools to update a fixer-upper.
Extra bedroom: having a spare guest room that sits empty until guest come to visit may be something you can sacrifice. Instead, look for homes that have a den or even a finished basement or attic that can be utilized when guests come to visit.
Outdoor space: everyone enjoys spending time in their backyard. Currently, land is a valuable commodity that will need to be sacrificed in order to find a home that is affordable. You may even find that all you really need is a great outdoor deck that can accommodate some family, friends and a barbeque.
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