Types of Housing to Look for Until You’re Ready to Buy
Thursday, October 15, 2020, 6:00 AM | Leave Comment
If you’re considering buying a home but you’re not fully ready to make such a large purchase, there are some housing arrangements you should consider.
You’ll also need to keep a few factors in mind to prepare yourself for becoming a homeowner in the future.
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Renting an Apartment
An apartment can be a quick fix for finding a nice place to live before you transition into home ownership. You’ll have to pay a few hundred dollars for security fees or pay the first month’s rent, but this amount won’t be as much as a down payment for a home. You also won’t have to pay for repairs in your apartment and landscape maintenance, which can help you save money.
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Buying a Condo
If you’re not prepared to take on the expense of a home or you don’t know if you’ll be in your current area permanently, you may want to purchase a condo. This will give you a feel of what it’s like to own a home, but you may still have some of the luxuries of apartment living.
Some condo communities take care of landscaping and repairs so you won’t have to add these expenses to your budget. Your mortgage rate and down payment may be lower for a condo, but you’ll still own your property and can rent it out to a tenant if you move away but don’t want to sell your condo.
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Getting a Roommate (Or Two)
Even if you decide to rent an apartment or buy/rent a condo, living there with roommates can help offset the costs of your residential obligations. If you want to live in a home but know you can’t afford all of the financial obligations, you may want to ask trusted friends or family members to purchase a home with you. Make sure that everyone knows what is expected of them before the move-in date.
For instance, if you’ll be in charge of the mortgage or rent, another roommate can take care of the utility bills, and the other roommate can handle the insurance payments and other bills for the home like groceries or repair services. This arrangement can help you save money until you’re completely ready to move into a home of your own.
Before you start looking for a home, it’s important to consider your debt to income ratio. According to the Federal Housing Administration (FHA), your debt to income ratio should be 43%. This ratio is what mortgage lenders use to determine if you can afford to make your monthly mortgage payments. Some mortgage lenders will work with you to help you get approved for a home loan.
However, it’s important to try to reach this ratio to ensure you can pay your mortgage on time and take care of your HOA fees, insurance, property taxes, and household bills. Keep this in mind before you start your search for a home so you can find houses within your price range and have the peace of mind of knowing you can afford your new residence.
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