Top Strategies for Securing a Budget-Friendly Home Purchase

Buying a home is a big investment. That does not mean that you cannot find a budget-friendly home to buy, however.

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Jan 21, 2021

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You always want to be sure that you can afford the home that you buy, but no one ever wants to have to give up the features and requirements that they want for their dream home.

If you have been trying to figure out how to find a budget-friendly home, this guide can help! You will want to consider all of these options when you are home shopping. Finding a budget-friendly home is a lot easier than you might think.

Top Strategies for Securing a Budget-Friendly Home

1. The 28% Rule

The biggest factor when looking at homes that fit into your budget is the 28% rule. This rule states that you should not attempt to buy a home with a mortgage that is more than 28% of your gross income every month. Many homeowners shop for properties that they like and ask questions later. This is not a good strategy and can lead to you opt to buy a home that is not budget-friendly.

Understanding your own income and finances is key when it comes to home shopping. Once you know what you make in gross income each month, you can just do some simple math to figure out what your starting budget should be.

2. Shop for Buyer Commission Rebates

A buyer commission rebate can be the difference between getting the home of your dreams or being unable to do anything but settle for a house that is just okay. Buyer commission rebates allow buyer’s agents to provide an incentive for purchasing with them. This incentive is typically a percentage of the buyer agent’s commission that is refunded to the buyer at closing.

This kind of rebate can help you to afford the home that you have always wanted, and it can also help to pay for things that you need as a new homeowner. Some people also find that this commission is the difference between being able to get into a home in an area or neighborhood that they have always wanted to live in. Always look for agents who offer this kind of incentive to help you to afford the house that you really want to buy.

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3. Consider Downpayment

While there are home loan types that allow you to buy with a very small downpayment or even without having a downpayment, most people don’t qualify for these programs. You should not count on being able to buy a home without the essential downpayment in hand. This can be a tough aspect of the homebuying reality for many people, however.

You will want to attempt to have 20% of the purchase price of the home in cash when you start home shopping. You might not be sure exactly how much 20% of any given home will be, but you can look at the average selling price of homes in your area to get a good ballpark number. When you have some cash in the bank for your downpayment, you will be much more likely to be able to secure a home with an affordable mortgage.

Leveraging perks like a buyer commission rebate can help you to make up the difference if you have a cash downpayment that is not quite enough for the home you want most. Being sure to have cash on hand is key when it comes to home shopping and sticking to a budget.

4. Get Pre-Approved

This is one of the best ways to be sure that you are going to be able to afford the homes that you are shopping for. If you know which company you want to have your mortgage, you can work with this lender to ensure that you have all the right information in their hands before you start shopping. The lender will be able to tell you what kind of mortgage they will extend to you,  which will dictate your budget for your home purchase.

This can be a great time-saving tactic as well. The housing market is often very competitive, and buyers without all of their ducks in a row can lose out on the houses that they want most because of snags related to documentation. Making sure to have your pre-approval in hand can also help you to work with motivated sellers who are ready to close the deal before someone else can swoop in and make a better offer.

5. Choose a Property You Can Handle

One of the other aspects of finding a home that is budget-friendly is being realistic with yourself about what you can take care of and afford. Even if you can stretch your budget a bit for a bigger home that offers things like a pool or tennis courts, can you afford the upkeep on these items? Many people get into too much home and then regret that they have done so.

Being sure that you are thinking about all of the added costs associated with a bigger home that has more property attached to it is key when it comes to budget considerations. You will need to be sure that you and anyone else involved in the purchase are actually prepared to care for the property that you are looking to buy. Having this kind of realistic discussion with one another can help narrow down your shopping to the most realistic choices.

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Shopping for a Home on a Budget Can be Easy

If you have struggled to figure out how to find homes that are within your budget, this guide will offer you the tips you need to find the home of your dreams that you can also afford. Things like buyer commission rebates can make it possible for you to find the perfect home at the perfect price. Be sure that you have the right amount of cash in the bank for your downpayment, these tips in hand, and then start shopping with motivated seller’s agents who offer all the right perks.

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