Just because you’re on a shoestring budget doesn’t mean you have to live in a shoebox apartment your whole life. In fact, with proper planning and some good ol’ budgeting, you can be well on your way to buying a great home, even with a tight wallet.
Here are our five tips for house-hunting on a tight budget.
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Tip #1: Watch Out for Rogue Real Estate Agents
Your real estate agent is there to help you, not strong-arm you into buying a house you can’t afford. Make sure you are clear and firm with your budget and your non-negotiables, which could include:
- Updated amenities
- Proximity to work or school
- Number of rooms and bathrooms
However, because you’re on a tight budget, you should also be prepared to make compromises about anything that isn’t on your non-negotiable list. That means if a house is just five minutes from work and under your budget, maybe don’t scratch it off the list just because it’s mid-century modern and not Victorian.
Tip #2: Refinancing is Always an Option
If you strike a deal with your current mortgage lender that ends up being a bust—say, you end up paying way more than necessary on interest—consider embarking on the mortgage refinance process. This will allow you to find a loan that better fits your budget and a lender that offers better customer service.
Tip #3: Pretty Houses, Sitting Pretty: Don’t Snob Non-Sellers
If a house has been sitting on the market for a while, don’t turn your nose up to it. There’s a chance it just hasn’t been other buyers’ cup of tea. However, it could be yours. While it’s crucial that you dig deep into each home, make sure you’re giving every house a chance. Who knows? This one could just be the perfect one for you!
Tip #4: Know What Fixer-Uppers Are Worth It
While flipping a house is compelling enough to inspire three too many HGTV shows, it’s not necessarily the wisest decision, even when taking lower upfront costs into consideration. The key to finding a fixer-upper that’s actually worth all the effort of fixing-and-upping is to distinguish between cosmetics and structure.
If a house you like just isn’t a looker, then there’s a chance you can take full advantage of its dowdy state, grab it for a good price, and revamp it with some nice surface-level changes, like:
- Giving the walls a fresh coat of paint
- Replacing the carpets
- Beautifying the backyard
- Updating fixtures in the kitchen and bathroom
- Adding new appliances
- Taking off her glasses (oh, wait, that’s how you make a 90’s Rom Com heroine pretty… wrong list!)
On the other hand, watch out for fundamental issues with the house’s structure. If that’s why the house is lifted at a lower price, you might want to stay away. Don’t get caught up in major (and expensive) projects like:
- Completely re-run wires to comply to code
- Install new ductwork
- Fixing issues in household electricity and piping
Tip #5: Snag a Short Sale
Short sales are a shining gem in the otherwise muddy waters of sky-high mortgages and intimidating property values. Here’s how it works: a homeowner can’t keep up with their mortgage, so they ask their lender to unload that property under the contingency that the proceeds go towards their mortgage payoff. The result? A nice property for you at a price you can actually afford. The trick here is to nab it on time: these bad boys go quickly.
Keep your eye out for short sales in your desired location—this task becomes even easier with the help of a real estate agent (or a property savvy mom).
Embrace the Challenge
Buying a house on a not-so-big budget can be a challenge. However, with challenge comes the opportunity to be creative! Use your resourcefulness to your advantage, get your friends and family to help with the hunt, and don’t be scared of doing a few hours of research. With the right budget and a positive attitude, you’ll find an affordable home in no time.