Jonathan and Drew Scott, stars of the HGTV show "Property Brothers," have worked with hundreds of clients over the years, helping people find and renovate their dream homes. And while the families the Scotts work with may have more options than the average person, the Scotts say that no matter your situation, if you want to buy a home, there's something you can do that will help: Get organized.
"If you stop and you plan," said Drew, a real estate expert and realtor, at the recent Property Brothers and Chase on Sweat Equity event in New York City, "you can guarantee yourself a path to homeownership no matter what your scenario is. You can guarantee yourself a path if you're organized."
Buying a home requires a lot of research. You'll need to sit down, crunch some numbers, and figure out what you can afford. In other words, "get your ducks in a row," says Jonathan, a licensed contractor.
You'll need to calculate your budget to include more than just an affordable monthly mortgage payment, though. Remember to account for all of the costs of homeownership, including taxes, insurance, and maintenance.
To give you an idea of what you should aim for, the average monthly cost of owning a home in the U.S. is $1,775, according to the State of the Nation's Housing 2019 report from Harvard's Joint Center for Housing Studies.
Also, think about what your needs may be in the future. If you plan on starting a family, for example, you may want to look for a place with more bedrooms. "Sit down, put some numbers on paper, and think ahead," Heather Winston, a certified financial planner at retirement plan provider Principal, recently told Grow.
Figuring your budget is perhaps the most important step you can take towards getting organized for your home search. And once you've worked out the numbers, here are a few hacks that could help you afford a place:
There are options for buyers with little money to put down. Federal Housing Administration (FHA) mortgages, for example, require only a 3.5% down payment. VA and USDA loans both have "zero down" options, too.
The catch is you'll typically be required to pay private mortgage insurance until you have 20% equity in the home.
Using "sweat equity" to help you purchase a home means that you're making renovations or repairs that add value. The monetary value that you add to a home is then counted by your lender as a portion of your down payment — it's equity earned through manual labor.
While it won't work for everyone, sweat equity is becoming more popular for buyers in areas with older homes and fixer-uppers, says Jonathan.
You can also look at working with one of the many new companies that offer would-be buyers lease-to-own contracts, like Divvy Homes. Divvy buys a house a buyer wants and the buyer then "rents" it from Divvy, with a portion of their rent going toward equity to eventually purchase it. Other companies, like ZeroDown, offer similar options.
While these choices give organized, prospective buyers a few paths to owning a home, the most important thing, the Scotts say, is to stay within your limits so that you don't bust your budget. "Don't go too big too early," Drew says. You can always start small, build equity, and graduate to a bigger home when the time is right.
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