First Time Home Buyers: 4 Ways To Save When Buying A House
Buying a home is expensive and it’s especially hard right now for millennials. This is the first generation that must carry the financial burden of student loans and new bills associated with new technologies that previous generations never had to worry about.
A big determining factor in how you qualify for a loan is your debt-to-income ratio. With the average student graduating with over $30,000 in debt, they may not qualify on an entry level position job, and are being forced to wait until much later in life.
Rent prices are skyrocketing across nearly every market that millennials are flocking towards due largely to new technology sector jobs. However, millennials are now faced with a dilemma of paying higher rent prices or buying a home and moving out of the city. The only problem, home prices are rising just as fast!
Things can get even more difficult for young families. Zillow just posted a report showing the average living costs combined with childcare costs in Seattle, WA are $55,000 per year. This is forcing many families to drive down the highway until they hit a neighborhood that is drastically cheaper in price. This is a new term called “drive until you qualify”. Let’s not forget either that with such high prices for rent, it can be nearly impossible to save for a down payment. Searching for a home to buy as a millennial in the Seattle area usually results in frustration and feeling discouraged. There has to be a little hope, right?
Well, to help my fellow millennials, I have done some research to find ways that can help home buyers reduce the cost of your total mortgage, require a smaller down payment and make home ownership more of a reality.
Downpayment Assistance Programs
Washington State Housing Finance Commission provides first time home buyers a seminar by trained and licensed realtors and mortgage lenders. The 5-hour seminar is setup to educate you on the buying process and go deeper into programs to help you finance your home. Once you complete the course, you are eligible to work with lenders that offer special loan programs including Downpayment Assistance, and Mortgage Credit Certificates.
Lenders will offer a Downpayment Assistance program where they provide you with a separate loan for your downpayment. This program is great for those who haven’t had the ability to save up 20% for a downpayment on a $500,000 home. You will have two home loan payments each month but it can help reduce your PMI costs.
Later, when tax season approaches and you are a home owner, you can receive a Mortgage Credit Certificate. This entitles you to reduce the amount of your federal income tax liability by an amount equal to a portion of the interest paid during the year on a home mortgage. This credit allows the buyer to qualify more easily for a loan by increasing the effective income of the buyer.
VA Loan Program
Military veterans rightfully benefit from VA Loan programs. A VA-guaranteed loan is a loan made by private lenders guaranteeing up to $417,000. Best of all, there is no need to worry about financing a down payment. You will likely have to cover closing costs but this is an excellent program for our veterans. Obviously, a lot of us are not veterans so this option may be a little far-fetched.
Real Estate License
Becoming a realtor is an option. If you are not cut out for the military, you can always take the courses and exams to become a licensed realtor and work out a deal with your sponsoring broker to hang your license. You will have to negotiate with your broker that for the home you purchase that they do not take his/her own fee. This is a bit of a stretch and a lot of work to save some money. Usually, brokers have take a 50/50 split on earnings up to a certain point and then offer a 60/40 or 70/30 split.
FAIRA Offer Assist
A far easier way to save thousands on a home purchase is with Faira Offer Assist. You don’t have to enlist into the military and commit four years of your life. Nor do you have to study hours of literature and take exams, pass a background check, apply and get hired at a broker’s office. With Faira Offer Assist, we provide any buyer the ability to find any home that is for sale, our agents will write up an offer for you, if your offer is accepted, you will receive a check for 3% of the agreed upon price. On a $500,000 home, that’s $15,000 back in your pocket. Many of our users have used the extra money to instantly pay down the principal, or some have made larger offers allowing a higher percentage of our buyers to get their offers accepted. As a buyer, you can make as many offers as you would like. You only pay a 0.5% platform fee if your offer is accepted.
In a competitive market where costs of homes continue to increase, you will have to get a little creative to make a compelling offer. There are programs and solutions out there to help you and your family find your home. By far, the easiest way to save thousands is through Faira Offer Assist as you don't have to change your career, join the military, or be a first time home buyer.