Yahoo Finance I Thought I’d Never Be a Homeowner: 4 Radical Changes I Made That Allowed Me To Buy a House
The dream of owning a home is one shared by many, but the real estate market presents unique challenges, especially for first-time home buyers. Both high interest rates and higher home prices have made the market tough to enter and left some people with fewer options.
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However, this has also paved the way for some people to come up with creative solutions or additional sacrifices in order to secure a mortgage. GoBankingRates recently spoke with Christy Lovato, a corporate employee in Illinois who recently bought a home after previously believing it wouldn’t be possible at this time. Lovato credits four key changes and actions to helping her achieve her goal of homeownership.
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1. Not Viewing the Situation as Impossible
It’s easy to feel overwhelmed by the obstacles in the current market, but for Lovato, maintaining a positive mindset was essential.
“The market has seemed rough over the past few years and there’s been high demand but low supply,” Lovato said when speaking about her desire to own a home in the West suburbs of Chicago. “Despite the economic uncertainty, I also wasn’t too confident about my ability to be able to afford a home purchase yet.”
Lovato said she has student loans, and had credit card debt and a car loan at the time she became interested in buying a home. But instead of focusing on the difficulties, she decided to shift her focus to the possibilities and brainstorm ways to actually bring her plans to fruition since she didn’t want to sign another 12-month lease at her apartment.
“I knew I wanted to pay down my credit cards before getting preapproved to help increase my credit score,” Lovato said. “From there, I considered refinancing my car to lower the payments and my student loans are currently in deferment since I’m taking classes for an online program that my job is paying for.”
2. Getting a Part-Time Job
Increasing your income is a practical way to boost your home buying budget, but it can also be a major change to your routine and limit free time for relaxing and other responsibilities. For Lovato, she decided to get a part-time job working at Walmart on evenings and weekends to help her save up for a down payment and pay down debt.
“It was hard working two jobs for several months but working at Walmart wasn’t terrible,” Lovato said. “Sure, I gave up a few evenings and most of my Saturdays, but I still had Sundays off and 100% of my paychecks went toward paying off my credit card debt.”
3. Getting a Co-Borrower
Another radical change Lovato made was getting a co-borrower and opting to buy a home with her sister.
“My sister and I kind of planned to go this route if we both wanted to buy something at the same time and I’ve had roommates before so it was a great idea,” Lovato said. “We’re both single, work full-time and grew up together so we obviously know each other well enough to be comfortable living together.”
By teaming up with her sister, Lovato says they were able to boost their purchasing power with two incomes.
“Our plan is to keep our home for at least four years, then we can sell if we want to and split the profit which would give me some cash to put money down on a new property that I can get on my own,” she added.
4. Negotiating Closing Costs
Lovato and her sister had a hard time getting an offer approved for a few weeks since they didn’t have a lot of wiggle room to increase their bid amount.
Then, their realtor told them about a property one of her clients was looking to sell and they took a look at that 3 bedroom, 2.5 bathroom townhome. The townhome fit their budget, but didn’t check all the boxes on their wish list.
“We compromised quite a bit when considering the home but I was willing to look past cosmetic fixes like replacing the floor or paint to lock in the deal because it was still a great property overall,” said Lovato.
Lovato and her sister decided to get an FHA home loan which only requires a minimum of 3.5% down and made an offer for the asking price of $300,000.
“We closed in just a few weeks and another perk of choosing this home was that we were able to negotiate with the sellers to pay our closing costs in full which was a major financial relief,” Lovato said.
She says they locked in a 30-year FHA mortgage with a 7% interest rate but hope to refinance it if and when mortgage interest rates go down.
“Yes, our interest rate is high, but I didn’t even think buying a home would be possible right now,” she said. “Plus, splitting the mortgage and paying $1,500 each while both of us have a ton of personal space to ourselves is still a win for me.”
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This article originally appeared on GOBankingRates.com: I Thought I’d Never Be a Homeowner: 4 Radical Changes I Made That Allowed Me To Buy a House
