Ways to Make Homeownership More Affordable

Ways to Make Homeownership More Affordable

The Bay Area housing market has been characterized by high home values for decades. After the price surges of the pandemic era, we’re currently seeing home prices correct to a more sustainable level. This is great news for buyers!

But homeownership in our high-value market is still an expensive proposition. So, to make homeownership more accessible to Bay Area buyers, the experts here at Sequoia Real Estate have put together a list of five ways to make homeownership even more affordable.

1. Take Advantage of Low Down Payment Loan Options and Buyer Assistance Programs

Some buyers are still under the notion that it takes a 20% down payment to buy a home. But this is no longer the case. Well-qualified buyers can get a conventional loan with just a 3% down payment. Even FHA loans, which offer more relaxed qualifying criteria offer a 3.5% down option for those with good credit. 

Certain buyers could even qualify for 0% down loans! Active military service members, veterans, and spouses, for example, can use VA loans, which have a 0% down option for well-qualified borrowers. And if you’re looking for a rural property, check out USDA loans, which also have a 0% down option. 

And don’t forget to check state and local buyer assistance programs, particularly if you are a first-time buyer.

2. House Hacking

House hacking is when a homeowner finds a way to make money from the property to help offset the monthly mortgage payment. And there are lots of options for house hacking!

  • Buy a multi-family property. You could purchase a duplex, live in one unit, and rent out the other. In some cases, the rental income is enough to cover the entire mortgage payment! And, even if it only covers half of the mortgage payment initially, as rental rates increase, the rent will cover more and more of your monthly payments.

  • Get a roommate. Renting out a room is another way to earn income from your home, helping you cover the cost of your monthly mortgage. 

  • Rent out storage space. If you’re not comfortable having renters share your space, you can still house hack by renting out storage space. Garages, attics, and even open parking spaces can all bring in extra income to put toward your mortgage. 

3. Get the Lowest Possible Interest Rate

Your interest rate dramatically impacts your mortgage payment. The lower your rate, the lower your monthly payment. So it pays to seek out the lowest possible interest rate if you want to make homebuying more affordable. 

There are several ways to get a lower interest rate, including:

  • Babysit your credit. The better your credit score is, the lower your rate will be. 

  • Shop around. Different lenders offer different rates.

  • Consider an ARM (adjustable-rate mortgage). Unlike fixed-rate mortgages, the interest rate on an ARM fluctuates with changing market conditions. And because the lender doesn’t have to guarantee the rate for the term of the loan, they will typically give you a lower rate on an ARM than on a fixed-rate mortgage. 

4. Prioritize Your Needs vs. Wants

You can save a small fortune on your home by simply clarifying your needs vs. your wants.

Just consider some of the many ways you can get a home for a dramatically lower price by adjusting your wants:

  • Opt for a smaller house than you originally intended to get. 

  • Consider a condo instead of a single-family property.

  • Search in the neighborhood next to your ideal location if it’s more affordable. 

  • Be willing to tackle a home that needs a little TLC.

  • Give up an expensive amenity (the pool, view, or patio, for example).

5. Get a Real Estate Agent in Your Corner 

Did you know that buyers typically don’t have to pay to hire a real estate agent? Real estate fees are generally paid by the seller and divided between the listing agent and the buyer’s agent. So you could hire a real estate professional to represent you for free!

And having a real estate agent in your corner can save you money in a few different ways. Your agent might find you an off-market listing, for example. This would mean you don’t have to compete against other buyers, so you might get the house for a lower purchase price. Or, your agent might determine that the home you want isn’t quite worth the asking price. In that case, your agent might advise you to offer less, saving you money on the purchase. 

Your agent can also tell you how much negotiation the market can support. Depending on current market conditions (and the specific situation of the seller), it might make sense to ask for the seller to cover some of your closing costs. Or ask the seller to reduce the price based on the results of the home inspection. 

Are You Ready to Buy?

Home prices in the Bay Area have dipped, but they will come back up at some point. If you plan to buy a home, do it now while prices are temporarily lower than they have been! 

The Buyer’s Agents at Sequoia Real Estate specialize in helping buyers get the best possible deals on homes they love. Whether you’re ready to buy today or you just want to make a plan to 

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