Buying a house is the American Dream, but it’s an expensive endeavor. Home prices have been rising for many years in most parts of the country, and in most areas, buying a home is a real stretch financially for the average person. That’s why it’s important to know how to invest in a house while still living within your means. If you want to afford a home in Southern California, employ these strategies so that you don’t break the bank.
Avoid Other Debt
Even though mortgages carry low interest rates, because they are such large loans with very long payback terms, you wind up paying tens of thousands of dollars in finance charges over the life of the loan. That makes for a very high monthly payment, especially when you also account for the cost of taxes and insurance.
To help fit that large payment into your monthly budget, it’s best to avoid as much other debt as you can. While you might need a loan for a new car, you should avoid carrying credit card debt.
Find a House That Fits in Your Budget
Many people stretch their budgets to the hilt when investing in a house, taking on a monthly payment that is a struggle to afford. To stay within your budget, don’t break the bank when buying a house. Buy something that’s below the top end of your budget, which will leave you some wiggle room for other things or to invest more into the house in the form of improvements.
Don’t Get Stuck With a Money Pit
No matter how much you are in love with a house, you have to look at it with an objective eye. Have the house inspected and if or when you find issues, negotiate any needed repairs with the seller.
For example, a professional pest control company will know that if the house has a termite infestation, a common problem in Southern California homes. Do not close on the sale until that problem has been fixed or the sellers have left money in escrow to pay for the fix.
Don’t Forget About Other Costs
Owning a home involves more costs than just your monthly mortgage payment. Taxes and fees are just a few of the hidden costs homeowners often overlook when purchasing a house. Not to mention annual maintenance and repair costs, about 1% of the cost of your house. It is important to factor in all of these costs when trying to live within your means.
Affording a house while living on a budget takes work, but it is doable. The key is to ensure you can afford all the costs of a home and still have enough money left over for day to day life. For help crafting your purchasing strategy and budget, reach out and we’ll match you with an experienced agent in your neighborhood.