One of the essential needs for human beings is the need for shelter, also known as housing. Housing is also the largest investment that most people will make, one which can leave them financially crippled for years. To purchase a home, many people need to take out a long term loan known as a mortgage and keep up with the payments until the loan is fully paid off. The issue is that the mortgage payments are usually high, and are rarely flexible enough to cushion changes in income or credit mistakes. To prevent these issues, you need to find affordable housing, a mortgage that you can pay off with ease to better help you manage your finances. Here are five tips to help you find affordable housing: –
- Get Rid of Debt
Getting a mortgage is choosing to go into debt. This debt becomes challenging to manage when you already have a large amount of other debt that you are dealing with. To get an excellent lending rate on your mortgage, the lender will evaluate the amount of debt that you already have to determine your financial commitment. With a better lending rate, you will be able to afford an upgraded home with ease.
- Save up for the Deposit
The larger the deposit that you save up, the lower the mortgage that you will have to take. A lower house payment means that you have less interest to pay back, and could even mean that you take a mortgage out for a shorter period of time. Depending on where you are making the purchase, most lenders will be happy to give you a mortgage with a 10% deposit. Aim to save up to 25-50% of the cost of the house you want to buy, and you will save more in the long run.
- Consider your Comfort
There are a large number of people who get trapped into housing debt by trying to purchase much more than they can actually afford. This is because they are concerned with keeping up appearances. True, people may admire your house, but they will in no way admire the debt that you accrue. It is better for you to start with a small home and work your way upwards. The first home that you purchase does not need to be your final one. It can be a starter home as you grow in life and in your career. Always purchase what you can safely afford.
- Watch your Wages
Before you plunge into purchasing any housing, consider your wages or your salary and how you are paid. Are you employed full time or do you run a business? What is your monthly cash flow? Are you paid per hour? Being able to honestly answer questions about your income will help you assess how much that you can afford to pay for housing. Lenders prefer to offer mortgages to people who have a consistent income history, so you may need to work towards that. Ensure that your income has been consistent for at least two years before you choose to make a home purchase.
- Compare with your Rent
If you have been paying a certain amount in rent each month, and have been comfortable making that payment, look for a mortgage that allows your payments to be around the same amount. This way, you meet the end goal of owning a home that you can afford, without fear of shattering your finances.
Affordable housing is not simply looking for a cheaper place to live or downgrading your lifestyle. Use these tips to make wise decisions, and purchase your own home, stress-free.