Anyone who is shopping for a home is aware that home prices have climbed precipitously over the years. That is great news if you already own a home, but if you are a prospective homebuyer, it may produce some concern.
First-time homebuyers tend to overlook some of the aspects of homeownership that make it affordable, however. Let’s go over a few reasons why it may not cost as much as you think to move into a home of your own.
Why Purchasing a Home is More Affordably Than You Think
- Down payments are lower than you expect. You might balk when calculating 20% of the price to purchase a lot of the homes that are on the market. Often, what holds back would-be homebuyers isn’t issues with affording a new home overall, but with affording the down payment. But did you know that you may not need to put 20% down on a home? With FHA, VA, USDA and even conventional loans, it is sometimes possible to purchase a home with a lower down payment. And with a USDA or VA mortgage, you do not have a down payment requirement at all. When you give us a call for a consultation, we can help you figure out what types of mortgage products you might qualify for, and a better idea of what your down payment might be. When you run the numbers again, you may very well find that the resulting down payment amount is much more within your means.
- You are building equity instead of wasting money on rent. Rental payments are often (though often not) lower than mortgage payments. But when you pay rent, you will never see that money again. Over the long term, that means that renting is actually very expensive, consuming a huge amount of cash that you could otherwise have put into an investment—like purchasing a home. Say you are lucky enough to pay very cheap rent, just $300 a month. Over 30 years, that adds up to $108,000! That is a lot of money to watch go down the drain—and enough to cover most of the purchase of an inexpensive house. If you had been putting that money into a home over those 30 years, you might have paid most of it off. When you think in those terms, you realize how much you can save by buying a home. After putting hundreds of thousands of dollars into a house, you still have that investment in the form of equity. You did not throw it away.
- There are ways to leverage your home for more income. Wouldn’t it be nice if you had someone else living with you who could help cover your housing costs each month? If you are living in an apartment, you probably are not going to be able to get away with trying to sub-lease a room to a tenant. And if you are living in one room yourself, that definitely is not going to be an option. Depending on the situation, it might not even always be possible to have the option of splitting costs with a roommate. But if you buy a home of your own, then you will have both the space and the freedom you need to bring in a paying tenant. Bringing a tenant into the mix when you buy a home is known as “home hacking.” Remember, even if someone is just paying several hundred dollars a month, that can add up to over a hundred thousand dollars in thirty years. So, never underestimate the value of even one low-paying tenant.
- You can make your home more energy-efficient. How much money are you spending on your utilities as a renter? You get no real say in your utilities costs. If you want your utilities to be less expensive, your landlord will shrug and say, “Stop running your appliances so much.” You cannot exactly forego trying to make your apartment liveable. But by moving into a home of your own, you get the option of making that home an energy-efficient one. This in turn can help you reduce your energy use while still staying comfortable during all four seasons. You can use less power and spend less money without sacrificing your health and wellbeing. The savings you accrue on your energy costs can add up to more than you think over time, helping to offset the costs of homeownership.
- Your investment will pay off. Eventually, you may pay off your entire mortgage, and then you will no longer have that monthly payment to worry about. That is a way more affordable way to live than continuing to have to pay rent for the rest of your life. Just think what you will be able to do with the money you save while in retirement. You may not only be able to live more comfortably, but you might also have the chance to accomplish more of your dreams in life. You also will be able to borrow against the equity as a senior if you need to using a reverse mortgage.
Buy a Home in Virginia Now
If you have questions about how much home you can afford or how to budget for a mortgage and other homeownership costs, we can give you detailed answers during your consultation.
Buying a home is often a much more cost-effective choice than many people realize, and your dreams may be closer than you think to becoming a reality. To get started, please call us at (540) 838-5868. We look forward to walking you through the mortgage application process so you can get the keys to your new home.