Lots of people are not buying houses. Housing is integral to the health of developed world economies, and interest rates have been kept low to encourage people to buy. But these encouragements don’t seem to have translated into significant numbers of people buying homes. There are a variety of reasons for this. Many young people are putting off settling down or starting a family. Buying a home solo is harder to do than doing it with a long term partner. Other people live in markets where home ownership isn’t affordable. Others prefer renting for lifestyle reasons. Some people don’t have the money or income to successfully buy a house. Finally, some people are still scared of all of the fallout that happened last decade following the global financial crisis.
But despite all of these challenges, homeownership is still possible for more people than presently take advantage of it. The benefits are clear. Most people pay much less for their mortgage than they do to a landlord. Equity is one of the chief ways by which people build wealth. What’s more, homeownership tends to have a lot of secondary, personal benefits for the owners, which don’t always translate into dollar figures. It’s not for everyone, but if homeownership sounds like it’s a good option for you, there are some good steps to follow to make that dream a reality.
- Make a REAL Budget. If you have never done so, make a real budget today. This should be a detailed record of everything you earn and everything you spend for a single month. Keep the record again the next month. From this, determine how much you earn and how much you have to spend on that which you absolutely need in your life. If you spend more than you earn, you’ve got to start trimming the fat. Cut superfluous subscriptions and automated payments. A free PPI calculator can help you figure out if you are making payments you never signed up for in the first place. Cut your spending to the bone and you will be able to start cancelling debt to zero and saving for a down payment. If you show steady signs of healthy personal finance decisions, your bank will be much more likely to give you a loan for a house.
- Earn More Money. Getting a mortgage loan is all about showing the bank you can handle the responsibility. One way is to simply make more money. If you can get a better job, start a side hustle, or work more at the job you have, you’ll be able to bring in the money you need to finance this next big financial move. Because buying a house is a can pay off for many years to come, it’s important to make it happen if you think you’re the kind of person who can handle the responsibility.
- Move to an Affordable Market. If you are free to move, and buying a house is a high priority for you, consider buying a home in a market which is more affordable. This may require you to move, but it’s worth it if you are the right kind of person. The price you will pay for a home in L.A. is many times what you would pay for the same home in Baltimore. Look at your options, move somewhere exciting, and find the markets which will allow you to buy a home.