Imagine this… You’re online, looking for a home and as you browse through the listings you come across your dream home! The perfect kitchen, open concept layout, a terrace, a yard, perfectly arranged furniture, everything you’ve ever wanted. Then you take a look at the price…and it’s waaaay over your budget. Sound familiar? I’m sure it does. We’ve all been there at one point or another, but instead of lingering over what we can’t have or dream of having, we need to make a game plan on how to achieve what we want, on the budget we have.
Home shopping on a tight budget requires discipline and a cold head. You have to work with what you’ve got, but with a little bit of luck, you’ll find your perfect fit within YOUR price range. Here is what you can do on your part:
Is Your Financial Plan in Place?
A tight budget requires careful spending. That means NO big purchases or large credit hits (sorry new car, you’ll just have to wait!). Address one hurdle at a time, and don’t rush your mortgage application. If your debt-to-income ratio doesn’t look good right now, come up with a plan on how to fix it. Some lenders have experience with this, so go ahead, ask me to introduce to a mortgage broker who can help you reach your goals. When it comes to the down payment, try your best to come up with more than the minimum required as not only will this lower your monthly mortgage obligations, but it can also help you avoid high interest rates.
Are Your Priorities in Order?
Think about features that make a home great, that would make your next home amazing… Perhaps, creating a list of all the features your dream home would entail would be a great starting point. Having a home with a swimming pool, or a large backyard might be fun, but is it essential? What matters most are the features that cannot be changed, like the size of the home and the location. These are items you cannot change. You may settle for scratched floors or no kitchen pantry, but not for a one-bedroom condo if you have a bigger family.
Take your list and draw a line between your wants and needs and be as objective as possible. Look around the space where you currently live. What drives you crazy the most? Is it the tiny kitchen or lack of storage room? Maybe, you’ll focus on a bigger kitchen and smart storage solutions in the new home, but maybe you’ll have to give up on a living room with a balcony instead. It’s all about priorities.
Can You Overlook Aesthetic Features?
Don’t be quick to judge a home just because it’s cluttered, dirty, has an awful choice of paint colour. These minor hiccups can often cause homes to sell at lower prices because buyers can’t be bothered to see past these small deficiencies and look at it as work. I see it as opportunity! It’s something you can easily fix and turn the place into a tasteful and beautiful home and you may just increase the value in the meantime!
Have You Considered Rent To Own?
Rent-to-Own may be an option if you don’t have enough for a full down payment or are in the processes of mending your poor credit. Work your way to home ownership with lease options that help force you to save up your down-payment through a higher monthly lease rate. Rent-to-own terms are often 2 to 3 years at most. With the right discipline, you could find yourself as a new homeowner!