How to Afford a New Home and Financing

If you're single or living on a small income and wondering how you'll ever afford a new home with its financing, you're not alone. Despite the recent surge in home prices, home ownership is still attainable, no matter what your income. To learn more about entry-level purchasing, keep reading to find out how you can afford a new home and the financing costs.

1. Start Saving Now

Yes, right now, put some money in your savings account. While it's important to pay down debt, prospective home buyers are more likely to get into home ownership faster if they start saving for a down payment sooner rather than later.

Set a feasible goal for saving and start socking away your money now before you spend it on movie tickets or a dinner out. Remember, the sooner you start saving, the faster you'll get into your home.

2. Get in the Market Now

If you're holding out until you can afford a four-bedroom house, but you can afford that 2-bedroom condo right now, you may be hurting yourself in the long term. Remember, as you pay off that smaller home, you'll be building equity that you can put toward your next purchase instead of giving it away to a landlord.

As the housing market is currently experiencing a downturn, you could also find yourself in a position to afford more than you could at this time last year.

3. Lower Your Expectations

Most homeowners don't walk into their dream home on the first try. It takes years of building equity and moving up through the housing market to achieve that dream.

Sometimes, making the leap into home ownership means lowering your expectations and facing the reality that you're not going to hit the jackpot the first time out of the box.

4. Put in Some Work

Along with lower housing costs sometimes come lower standards. If you're purchasing an affordable home in a desirable neighborhood, you'll likely have to invest some elbow grease into the deal. So, get your paint brush and be prepared for a little work.

5. Relocate

Sometimes breaking into home ownership is about being willing to move down the street. While suburban or rural living isn't always ideal for city workers, it often means reduced housing prices.

Alternatively, if your job allows you the freedom to relocate, you can look into other urban centers that offer lower housing prices - like Dallas, St. Louis or Kansas City.

For insightful information on new home locations, see homepropertytips.com, a popular site that assists in your search for the perfect home, including Adelanto new homes, retirement new homes, West Palm Beach condos, cool house plans, and many more!

What NOT to Do Before Buying a Home

You have made that big decision, but there are some things not to do before buying a home. Whether you are selling your current home or are a first time buyer, there are some things you should never do before completing the transaction. Because buying a home isn't an impulse buy, you will have a few months notice before you actually go through with the sale, in most cases.

First, don't play with your finances. Don't spread your wealth around, buy new stock, invest in a new money market account, open a new checking or savings account. The institution who looks at your finances will look at all of your finances in an attempt to determine your liquid assets and your net worth. You will want to make this as easy for this person as possible. If you diversify your finances too much, your disclosure process will be much more difficult.

Buying a new stock or investing your money within six months before buying the new home will reduce your liquidity and maybe hamper your ability to buy a new home. Wait until after you buy to invest your money elsewhere.

If you are fed up with your bank, hang in there a few months and change banks after you buy your home.

All major purchases need to wait until after the deal is closed. Weddings, cars, furniture, appliances, electronics can all wait until you are in your new home. By purchasing something major ahead of time, you limit the amount of money you will need for a down payment. If life comes at you and you have to make a major purchase, put it on a low interest credit card. Just be certain the emergency is a genuine emergency before you make a major purchase.

Ideally, your debt to income ratio should be 50%. That means your mortgage and insurance payments should be no more than 50% of your gross monthly income. Be certain your estimated final mortgage payment is within your budget and do not over buy a home. If you are currently paying $700 a month in rent, you may not be able to pay $1600 for that six bedroom home plus an additional money for home owner's insurance.

Do not change jobs. Sometimes, you cannot help a change, such as getting laid off or fired. If that happens, you would be wise to delay your home purchase for at least six months after you find a new position. Longevity in employment is an important factor in getting financing approved.

The folks at Nancy Chandler Associates, REALTORS, Licensed in Norfolk, Virginia, can help you will this topic and any other home buying or home selling question you may have.

Karen Vertigan Pope writes for Ciniva Systems, an award winning Virginia web design company. Ciniva specializes in web design and SEO. Ms. Vertigan Pope is an SEO Specialist with Ciniva. Ciniva Systems is in charge of SEO for Nancy Chandler Associates.