STRATEGIES FOR FIRST-TIME BUYERS TO AFFORD A HOME IN TODAY’S MARKET {NEW HOME BUYERS -PART ONE OF SIX}
Disclaimer: Good Day, Readers. WealthBuildingPowers blog is a financial literacy/competency blog and does not provide specific investment recommendations.
FIRST-TIME HOME BUYERS TODAY – LET’S DO IT!
Buying a home today is exciting, challenging, AND achievable for first-time homebuyers. Despite the steep rise in home prices, which have skyrocketed like a Space X rocket since 1970, many opportunities exist to find affordable housing in desirable areas with research, determination, and time. Don’t let the soaring home prices and seven percent mortgage rates deter you from achieving your dream.
There are options available, including first-time homebuyer programs and incentives, that can help make YOUR dream of homeownership a reality.
HIGHER DOWNPAYMENT = LOWER MONTHLY PAYMENTS
Today’s first-time buyers must utilize critical thinking to get that home! The table below calculates several monthly payments if buying the U.S. median single-family home, which costs ~$450,000.00.
| Down Payment % | Down Payment Dollars | Monthly Mortgage @seven percent, excluding insurance and property tax |
| 5% | $22,500.00 | $2,843.17 |
| 10% | $45,000.00 | $2,711.32 |
| 15% | $67,500.00 | 2,579.46 |
| 20% | $90,000.00 | 2,447.61 |
HIGHER FICO SCORES = LOWER MORTGAGE PAYMENTS
The importance of good credit scores and how to improve discussed in next week’s blog. Stay tuned – Can Save You THOUSANDS OF $$$$$$
SEARCHING FOR FIRST-TIME HOMEBUYER ASSISTANCE PROGRAMS
- The National Association of Realtors provides information and resources for first-time homebuyers, including a directory of state-specific homebuyer programs. You can visit their website at https://www.nar.realtor/first-time-home-buyers/state-assistance-programs-for-first-time-home-buyersand contact them for further details.
- Search online for first-time homebuyer programs in your specific state and city. You may find information about eligibility requirements, income limits, and contact information for local programs.
INNOVATIVE FUNDING OPTIONS
Consider innovative solutions today to afford your first home.
- Buy a property with your parent(s) as an investor. I purchased two investment properties with my Mom. I now own 100% of those properties. Draft an agreement outlining who pays {taxes, utilities, repairs, etc.} and what happens when one party wants to sell. Typically the other party has the right to match any fair offer.
- Buy with another first-time buyer—Draft an agreement outlining who pays {taxes, utilities, repairs, etc.} and what happens when one party wants to sell. Typically, the other party has the right to match any fair offer. Have a legal written agreement drawn up and signed to avoid disagreements in the future.
- Set up an investment club LLC, a legal entity, and members buy your first investment – maybe three people. All live there, build equity, reduce monthly bills………..save for another house. Hopefully, income is also rising………..
- Shared Equity Programs: These programs enable first-time buyers to purchase a home with a lower down payment and a reduced mortgage payment by sharing the equity with investors. Investors typically receive a percentage of the home’s appreciation when sold.
- Rent-to-Own Programs: Rent-to-own programs allow first-time buyers to rent a property for a set period before they have the option to purchase it. A portion of the rent paid during the rental period is applied towards the down payment when the purchase is made.
- Employer-Assisted Housing Programs: Employers can offer housing assistance programs to their employees to help them purchase their first home. These programs include down payment assistance, homebuyer education, and mortgage financing.
- Crowdfunding: Crowdfunding platforms can help first-time buyers raise funds for their down payment. Friends, family, and even strangers can contribute to purchasing a home through crowdfunding.
- Micro Lending: Micro-lending programs can offer small loans to first-time buyers who may not qualify for traditional loans. These loans can be used for down payments, closing costs, or renovations.
OPTIONS WHEN TWO OR MORE BUY A NEW HOME
- Joint Tenancy is the most common form of co-ownership, where each partner has an equal share of the property. If one partner dies, their share automatically passes to the other partner.
- Tenancy in Common: This form of co-ownership allows each partner to own a specific percentage of the property. If one partner dies, their portion of the property will pass to their designated heirs rather than automatically to the other partner.
- Limited Liability Company (LLC): Partners can form an LLC to purchase the property, with each partner owning a percentage of the LLC. This can provide liability protection and make it easier to manage the property.
- Partnership Agreement: Partners can create a partnership agreement that outlines the details of their co-ownership, including how costs will be shared, how decisions will be made, and how the property will be managed.
Consult a real estate attorney to ensure all legal requirements are met and protect the investors.
CONCLUSION
The best time to buy a home – when you can afford it. Making it affordable is 100% in your capable hands.
Start by building your competencies: Community Colleges, libraries, YouTube, Udemy, etc., offer classes on home-buying and financial planning. These classes help first-time buyers understand the process and make informed decisions. ENROLL!
Just do the work. Spend Less Than You Earn; Save and Invest; Buy your home!
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I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger with an N.C. State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
I left a corporate career because I desired to make a difference as a speaker and writer. I was blessed to be coached and mentored by strong women and men in my family and professional life. It is my time to serve and give back.
DISCLAIMER
I started my first business at ~13 years of age (a small but brilliantly created plant nursery). I am a successful investor in stocks, options, real estate and am happy to share my finance and investment lessons. I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog as recommendations for your situation. As an investor, you must establish your risk/loss tolerance. Investment in any asset involves risk, including complete loss.
Please seek your licensed CPA or fiduciary financial advisors for individual financial advice.
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