Buying a House Even if You Only Make a Little Money

buying your first houseMany low income people turn to help from charities to get a house of their dreams. It is possible to do it all on your own. How do I know? I lived on minimum wage and bought my own home.

 

Many renters often wonder in the up and down market of real estate, if they are better off renting or should they buy a home. Indeed some are worried that if they buy a house and the market changes, their house might not be worth the price they paid for it. So let us examine some facts.

Pros of Renting

When a person rents a home the landlord is responsible for repairs and maintenance.

Freedom to leave when the lease is expired (where as a home owner usually must sell their home first before relocating).

Cons of Renting

Although the landlord is responsible for repairs, not all landlords are prompt in doing them, thus we often hear the term “Slum landlord”.

You have more rules to follow, such as if you can own a pet, or how many visitors you are allowed.

Although you do not directly have to pay property taxes, these are included in the rent.

If the landlord sells the property or decides to convert the apartment units into condos for sale, you can be evicted.

Most rental properties (such as apartments) do not have yards, this is an important consideration for dog owners, and parents.

You can have neighbor problems, separated by only a thin apartment wall.

You have no freedoms to make changes.

The landlord can raise the rent.

Your rent money never comes back to you.

Pros of Owning a House

Your money is yours when you move and sell the home.

You have the freedom to make changes in the home and to the yard.

You have a yard, a much needed space for dogs, or children.

You have stability, you do not have to worry about having to move if the rent is increased, or if other conditions change.

Cons of Owing

If something breaks, you have to fix it, or pay somebody to fix it.

If you get a job change, you have to sell the home to move.

How to Become a Home Owner

Make home ownership a goal. This means making sacrifices along the way. Live cheaply, save money.

Eat at home, rather than having meals out. If you drink coffee, make your own rather than paying ridiculous prices in a coffee shop.

Drive a cheap vehicle, one that does not require payments.

 

Reduce other expenses by not having cable television, cell phones, and other luxuries that eat away at your income.

When shopping ask yourself if you really need an item. Ask yourself if you can buy it cheaper elsewhere (as from a second hand store). Look for good deals, but don’t just buy something because it is a good deal, buy something because you need it and it is a good deal.

Drink tap water rather than expensive bottled water or pop.

Live someplace cheap, either your parents house, or some place with low rent.

Save, save, save. Put your money into a savings account. Every time you get $1,000 put that into a term deposit to earn good interest.

Save Money when you Buy

If you have made savings a priority you should be able to buy a house and have a large down payment. Some people think that once they have a down payment they are better off to buy the biggest house they can. click here

Let us say you have $20,000 for a down payment. You can either buy a $80,000 house, having made a 25% down payment, or (in some areas) buy a $200,000 house, having made a 10% down payment.

In the long run, buying the smaller house is the smarter move, because very likely your mortgage payments will be less than renting the same type of property. As such you have greatly increased the amount of monthly disposable income you now have.

 

 

Length of Mortgage

Ideally you will want to pay off the house as quick as possible as this saves you money in the long run. Negotiate a mortgage that you can afford but make it as high as you can afford. Making mortgage payments every 2 weeks results in getting the house paid off sooner than making monthly payments if you arrange it correctly.

If you can afford to pay $800 a month, but the mortgage works out to $650, ask if the mortgage company can set you to pay $750 or $800 a month, just to get it paid off sooner.

Stop Worrying About the Housing Market

It is usually cheapest to buy a house at the end of summer or into the fall and winter, but fewer houses are on the market at this time. One thing is that if you buy a house in a relatively stable area, prices will go up, in fact it is rare that they do not.

However you should think of buying a home, rather than buying an investment. Imagine, in the worst case, that in ten years the home is only worth half of what you paid for it, if you sell you are still getting money back from it that you would have never recovered if you were renting.

If you made a large down payment and had mortgage payments that were lower than rent, you still come out ahead in the long run.

Still Don’t Think it Can Happen to You?

I made home ownership a goal.  My first husband (since deceased) and I lived cheaply, and even though we only worked for minimum wage we did manage to save up enough to make a large down payment on a 3 bedroom home with a large fenced yard.

Our mortgage was $220 every two weeks, much lower than rent on a similar property would have been.  Even when he passed away and I was a single parent I was able to make the payments while working part time for minimum wage.

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