Darin and Christina Cunningham | Re/Max Elite
278 Franklin Road Suite 190 | Brentwood, TN 37027
Office: 615.661.4400 | Fax: 615.661.4115
Christina: 615.394.4168 | Darin: 615.456.4086

3 Practical Ways to Own a Home When on a Tight Budget

You might think that it’s impossible to ever own a home when your monthly household income is only sufficient for your daily needs. After paying your bills, perhaps you are left with a few extra dollars which may go into your emergency slush fund. But there are ways to become a first-time homeowner even if you are on a tight budget. You need to be both creative and patient. For now, let’s just assume that you don’t have the time to work extra in order to increase your income.

 Buy Fixer-Uppers

“Fixer upper” is just a nice way of saying that there’s a lot of work to be done on the house. You do have to do the legwork since, for the most part, most (but not all) houses under this category are in poor condition. But, you can find that diamond in the rough with the help of a real estate broker. When that happens, the house is actually habitable without putting too much money into renovation and repairs. Consider this your long-term project. Allocate money each month for renovation purposes.

A less than common option is the ‘rent-to-own’ scheme. It works just like it sounds. You lease a property with the hope of someday owning it.

Consider Foreclosed Homes

On average, foreclosed properties are about 30-40% cheaper compared to conventional mortgages. First, you need to find a broker who specializes in foreclosures. You then approach your lender for mortgage pre-approval. Bid for the property with the full knowledge that you buy the property “as is.”

You can also find homes that are in ‘short-sale’. These are properties that are being sold at below the value of the home because most of the time the owner has encountered some financial difficulties, and could no longer meet the mortgage.

Another way is home land contract. Also called a contract for sale, the vendor will still hold the deed to the house and the piece of land until you have made full payment. In this method, you don’t need to go to the bank or other financial institutions in order to get approved for a loan. In return, you get an equitable title.

Passive Income

An extra room in the house that you are not using is a good way to earn passive income and help pay the mortgage. This is very big right now, particularly with the Air BNB services going global. The only downside is that you don’t get a stable income, especially during the tourism off-season. On the other hand, if you live near a university, you can rent out the extra room to a student.

Of course, the disadvantage is that you will be sharing the space with a roommate, and you never really know a person’s behavior until you live with them. With proper screening, however, this is a workable solution to your tight budget problem.

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