Most people assume homeownership is something they can never accomplish because they don’t have a large enough downpayment or excellent credit. And sure, not everyone has an inheritance or has been a diligent saver enough to where they can plop down on the purchase of their first home. However, if you’re interested in breaking the cycle of paying rent toward a property you can’t claim on your taxes, and if you’re interested in owning your patch to call home, here’s how you do it.
The first thing is first, you need to save some money each paycheck, which may mean you sacrifice your current quality of life by living in a place slightly below your means, not driving that flashy car, reduce the number of times you eat out and be both practical as well as reasonable about which small luxuries you’re willing to sacrifice that will allow you to pocket the savings each month. Try to remind yourself, the prudent fiscal adjustments are temporary while you save for the goal of owning your own home.
So now that you are putting some money away each month, including a portion of your tax return you receive each year, its important to focus on the other side of the equation, your credit score actually affects your ability to buy as much as your downpayment does. You can do this by staying current on with all of your creditors as well as keeping your credit usage to around 15-25% of your total credit allowance.
Fast forward a few years and let’s assume you have managed to scrape together $16,000. Well, guess what, you have just landed your self in a position to purchase your home with the help of what’s called a “first-time homebuyers” loan.
You will now have the potential to buy a home in the $400,000 range with a 3.5% downpayment. Naturally, your income, job stability, and credit history will all be factoring this.
Now you might look around and say, “What can I buy for $400,000 in Orange County?”
As it turns out, $400,000 is plenty to find 1 & 2 bedroom condos, especially with the help of a great agent, (ahem) you might even find it has a garage and low HOA fees.
My point in telling you this is so that with some effort, you can not only save enough for a downpayment but also own your first home. Which will allow you to accumulate equity and eventually a profit when you decide to sell, allowing you to roll those savings into your next home. And that’s how you play the real estate game.
Much like the board game “Monopoly,” buying your first property allows you to both save and make money on the house to then afford a bigger house each time if that is what you desire.
Still, think it’s impossible? Still, have questions?
Call me, let’s plan your next 12 months out and get you into your first home.
You can do it and I can help.