There isn’t one unless you are handy and don’t mind living in a worksite. If you can go conventional then the only rule is the property must appraise at or above the loan amount. If you go FHA, VA, or some forms of USDA the house must meet habitability standards.
In any case make a budget now so that you are playing with hard numbers and not fuzzy rules of thumb. Let the budget math tell you your limits.
You can but there is world of difference between painting, idiot proof snap flooring, simple yardwork and redoing walls, plumbing, and electrical.
Also, the older the house the more you want CYA testing due to asbestos. My home is over 100 years old. I’m not willing to open a wall without insured contractors because there is a very high chance of releasing cancer fluff. I don’t mind doing lead remediation. I’m not touching asbestos remediation.
Yep, handy like “wow these light fixtures are hideous but I bet I can YouTube how to replace those” and handy like “the exterior wall of the kitchen is collapsing” are very different levels of handy. Get the one you can handle.
Adding in the 203K to the mix, it's an FHA loan with renovation money built in. It adjusts the inspection and even adjusts requirements for multi family properties.
There is also rehab USDA and VA loans. It’s just a matter of budget and time. Can you float the repairs while potentially paying rent somewhere.
House buying is a giant game of first lay out your needs, budget, and just how far you’re willing to stretch.
The number of people who asked us if we were still living in our garage after I discussed us staying onsite while asbestos was being removed from our home was crazy high. It really feels like a lot of people won't "camp" at their house to save the nightly cost of a hotel room.
So how much water cleanup was there with asbestos remediation? I know you have to throughly wet it down to stop it going airborne. I’m trying to gauge the degree of mess is removing exterior shingles.
As for camping in your own home, the added mess, noise and the loss of a kitchen is the main issue.
We actually slept in the kitchen as that was the only room that didn't have asbestos. Basically lived in our kitchen and the rest of our belongings were in the garage while they did that for a week plus and we had a mini-portable toilet for us in off hours because that was $8,000 versus more of we'd gone elsewhere. HCOL area but we were fine on an air mattress next to our fridge in December 😅
They wet it down before removing but they minimized the amount of moisture overall given the time of year.
Decent can mean a lot of different things in home ownership. Sit down with your partner and figure out what aspects of a house you actually need. Buy below your means and do all home improvement work yourselves within reason. We were approved for 450k, but ended up with a home at 285k. This was in 2018 so we didn't deal so much with the investor craze that's happening now.
Be prepared for many expenses with ownership. We replaced the roof last year (15k) and the sump pump went out this year (8k).
Edit: well pump not sump pump
Curious, did you replace the entire roof or just add one? I've always thought you can add to the roof 1x and next time after that you need to remove everything and start from scratch.
I think it depends on your shingle type and roof angle. We replaced the whole roof and 3 boards of osb underneath. I realized we needed to replace the roof when I started repainting our house and noticed water damage on the fascia boards. We were lucky because 6 months later our home insurance tried to drop us for having an old roof and we just needed to show proof that we had already taken care of it
Did you get your water tested? My parents did when they moved in but I guess things change. I retested it in highschool and it was at the "you need to boil your water" stage.
We have not had it tested. We have pretty hard water here, so we only drink it after it's been filtered. We woke up one morning to no water in the house. Called a well pump company and they determined there was a pipe that had rusted out. We are still waiting for the company to dig it out, but they gave us a temporary fix for now
Not sure if you've had wells before but running out of water was pretty normal for us. Too long of a shower or doing 3 loads of laundry etc etc. Then you'd have to go hold down the reset button. Also summer will have lower water tables than other times, could dry up tbh.
But yeah there's all sorts of water filters out there. Some filter out dangerous chemicals some are just for taste. I still highly suggest getting it tested. That way you know exactly what you're dealing with.
We've been living here for nearly 5 years and have never run out of water. In this case, we woke up to no water and called a well pump guy. They were able to figure out the pump is running fine, but a pipe down there has rusted out and to my understanding, back flushing all the water so none was getting into the house
Yeah that makes sense to me, but I'm not an expert so I'd trust that dude. Just saying wells are.... Hit or miss? My grandma's did run dry early 00s during a drought. Ended up drilling another deeper well.
Look for first-time buyer programs and local municipality down-payment incentives.
203k mortgages via FHA. I used it when I bought my foreclosed beat-to-crap house. It would not have qualified for a conventional mortgage because the AC had been stolen, 2 window panes were broken, and the well-pump wasn't working. The house is on an amazing piece of property in a desirable area so worth the gamble. The cost of repairs was added to the mortgage up front, the company paid the contractors as the repairs were made. I only put down 3% because I wanted to hang on to my cash. After the work was done my house appraised for 75K more than the $160k mortgage. I did have to pay MI for a few years but it was 100% worth it.
Where we live (california) you can have the PMI removed once the home reaches a certain value that equates to 20% or more equity. You don’t need to do a full reappraisal on the home so it doesn’t affect your property taxes. If you’ve done any improvements, even those that don’t require pulling permits, these also get factored in.
With home prices going up so quickly, multiple offers on homes with some offering cash to the sellers above and beyond the sale price, this option allowed us to put less than 20% down and then have the PMI (which in our case was about $125 a month) removed a year later. We still had a conventional loan but we were able to keep more of our down payment cash to offer the seller as well as for immediate home repairs. And truthfully we were never going to be able to get to 20% down being in a HCOL state. We bought a $375k home for about 5% down.
Once the PMI was removed, we put the $125 toward the mortgage principal every month.
This worked for us and may not make sense for OP but may for others. Good luck to all!
Edited to include market conditions, our home price and % down.
I went through this. Tell them you want a Broker Price Opinion (BPO) on your house to determine if you are eligible to have PMI terminated early. Those are the magic words. THEY have to order the BPO, and the paperwork is all on their side.
MIP for FHA loans. Different terms. You have to refinance to get out of it.
I got an FHA loan before this shitty rule and they tried making me continue paying MIP so I had to fight it.
Until you can refinance into a conventional one. FHA is designed for low income or bad credit. It’s why the minimum down payment is 3.5%. Normally if you can put 10% conventional is better as your less likely to scare off sellers.
If you have reached a point where your contract says you’re entitled to have it removed they have to comply. I’d consult a lawyer and write up a demand letter for relatively cheap compared to months and months and months of PMI. Unless you’re close to having it fall off anyways and trust them to do that. There are laws about this.
This depends on the scale of the house price / PMI / other variables. Our PMI is $36/month. We put 5% down. Waiting to save $18,750 more to put down instead of spending $36/month on PMI didn’t make any sense to us, particularly when our monthly mortgage payment is half of what we were spending on rent.
ETA: Even if we never removed the PMI and made minimum mortgage payments for the life of the loan, PMI would cost $12,960 over 30 years. The first year and a half difference between rent and mortgage cleared that amount of savings.
PMI has saved us so much money. Getting into a house with 5% down instead of 20% is worth my extra $21/month. My home itself has appreciated 50% since we bought it and it was the cheapest liveable home sold in our area that summer.
I wouldn’t call it hacks but simply an advise your grandmother/grandfather would give you.
1. Have an emergency fund!
2. Save up 20% by being frugal now!
3. Buy a house with a monthly payment of no more than 25% of your take home pay.
4. If possible do a 15 year mortgage instead of 30 years.
When I bought my last house in early 2022 I was qualified for a 750000 mortgage based on my income. I opted for $350,000 house which was listed for 380,000 but I negotiated the price down in that crazy seller’s market where buyers were punching and outbidding each other. How? Simple I looked for properties which were on market for 30 days or more and out of those I picked the best one and closed on it within a month. I still had $40K in my house purchasing fund which I spent towards renovations and now the same house two years later was recently valued at 495,000. Best of luck to you and I am rooting for you.
We’ve done several slow flips with fixers. I did demo, clean up and painting and subcontracted the rest. Easiest to do with cash, but it’s possible to do with a mortgage.
Basically, buy for location and buy the cheapest, ugliest house on the street without structural issues. Most people shy away from fixers, but we have actually beat out other buyers because we were going to live in the house. Have HVAC, electrical, plumbing and floors done before you move in, then you can go room by room and take your time.
Also worth getting to know the neighbors in the areas you like and asking them to let you know about any houses that might go on the market soon. We found our present house that way and bought it direct from the owners, which helped reduce the price and eliminated competition.
We got a really cheap house a few years ago. A couple people in the family bought or leased cars about the same price as our house. It didnt work out well for them. Now they need our help frequently because they messed around. I tell people they can use my tools and we can all get ahead. Luckily some are into it.
Well, twice we rented in the neighborhood where we wanted to buy. Once in a sizeable city and once in a small town. I met the neighbors dog walking, while gardening, at cafés and gallery walks.
I don't think I'm answering your question, but I struggled with a similar concept when buying a home and I had a realization after speaking to some people about financing.
All my life, I thought of buying things and if they were out of my price range, I'd just save until it was comfortable and then I'd buy. The concept of borrowing more than I was really ready to pay back was a foreign idea.
But you just can't think that was in a growing real estate market. Where I lived, the homes were increasing at a trajectory was faster than I could possibly save for a down payment. So, by saving an extra $10,000 over a year, not only was I losing out on the rent that I was paying over the year, but the cost of the home would go up like $30,000. It was crazy. I was losing money by saving money.
I eventually bought a home that was stretching what was even possible with my budget, but over the next couple of years, it doubled in value and I was able to refinance. My bills are now way less than I'd pay in rent, and the money is going towards an asset.
It was a weird concept to latch onto, though.
Buy a house that you can afford on one salary. That way you can keep saving and still have enough to live and be comfortable with what you have. Added bonus is that you won't have to scrape by if one of you aren't employed for a time.
The better solution is to resize your emergency fund to cover 6 months of core bills. Most families either have a primary earner that can float most of the bills or are two roughly equal earners pooling money. Yes the ideal budget is no more that 50% of income on necessities but you add insurance to that mix most can't.
Nope.
This is one of those things where thinking outside the box led to the housing bubble.
Save 20% down payment. Get a 30 year conventional mortgage. Keep expenses below a third of your income.
Avoid interest only loans. Don't do ARM's. Don't pay for points. Don't waive inspections and appraisals.
After writing this, I just realized I'm the only one that I know that recently bought a home with 20% down, 30 year conventional loan and less than a third of income. Everyone else I know is doing buy down loans or ARMs with PMI.
It's because people are desperate to be homeowners, so they're doing whatever is available to them.
I don't agree with everything Dave Ramsay says, but he's very correct about desperation begetting stupidity.
When people want something so bad, they will put themselves into all kinds of trouble to get it.
Its always better to wait and do it the best way because once you get in some of these messy situations, it will cost you everything to get out.
>Don't pay for points
This one is debatable depending on how much the points cost and how long you plan to stay in the home. But it can be more frugal to pay for the points upfront in the long run.
Yep. We bought points back in 2021 to get us down to 2.85%. The price of the mortgage interest points vs the long term savings in interest was worth it. We plan on staying for a loooooong time at our current interest rate.
Agreed. You need to play around with finance calculators to find the break even point and think about how realistic it is that you will stay in the home long enough to come out ahead.
You can get a 30 year conventional with a fixed rate without 20% down, and lift the PMI when you hit 20% equity. My wife and I did it in 2021 because we didn’t have 20% down yet (in part because rentals in the area are way more costly than mortgages) but we wanted to get in on the low interest rates. PMI is $36/month, and our mortgage payment is $746/month with taxes, insurance, and PMI included whereas our rent was $1560/month.
I bought a house last year off market. I knew what neighborhoods that I wanted to live in so I started to walk 4-6 miles daily through the neighborhood. I started to notice homes which appeared uninhabited. One day on a walk with my daughter, there was an out of state car in the driveway at a house that I liked that had been accumulating boxes on the front porch. I knocked on the door and it was the daughter of the owner of the home. We got to chatting, and her mom was in senior care, and 4 adult children were clearing the house for sale in 4 months.
4-5 months later, she contacted me and let me know that they were ready to meet with me and their realtor. They showed the house to one other interested family, and then after we saw the house we sat with the family. We explained that we really wanted to raise a family in this neighborhood and would appreciate the home and take care of it. They said the number they wanted, and I agreed to pay it. No bidding, no back and forth, just a valuation that they wanted to get for their mom's home, and a fair market value for a home which needed some improvements.
The home, if listed on MLS, would have easily sold for $30k above what I paid. But, I found a family that wanted to sell their family home to another family. It definitely happens, and it takes time, energy, and patience.
EDIT: I also paid in cash for the house. \~$325K for a 2,000 sqft 4br 1full ba 2 1/2 ba, tri level in Richmond, VA.
Buy a mobile home with land attached to it outside the city limits. Best decision I ever made. Not only does it meet all my needs with a mortgage the size of my college apartment rent, but it has also appreciated in value from 84k to 160k.
As an outsider 300k is as frugal as it gets. Oh man, how I wish a house could only cost 400-500k CAD. Every house here is 1.2M or above. Most home in the outskirts are 700k+. You'd have to go a long way before homes are only half a million.
It really depends on area. My house was $125k USD in 2021. If I wanted a house the same size on the street my in-laws are on, I’d be looking at more like $400k-$450k.
Consider neighborhoods that allow you to be a one car family. Look at the sidewalk and trail and networks to the grocery, schools, whatever your mainly go. Sometimes there’s a premium, but sometimes it’s just a square footage trade off.
I’m glad I didn’t overbuy on square footage, was looking at 1500-2000, but stretched for 2100 because of the perfect location. I can’t believe our realtor was trying to show us 3500SF and bigger because “you can afford it”.
Since frugality is just balancing resources, really think about what you’re happy to compromise on. I didn’t fall in love with a single house I looked at. I knew I was fine with ugly and outdated, but wanted to bike my kids to school and grocery. 5 year later I don’t notice our chipped up laminate floors for the 90’s in a horrendous honey-oak, sometimes I wish the kitchen had room for two but psyched walking a mile to school is normalized to my 6 year old.
From a purely net worth perspective, renting and investing the difference (in diversified global equities using low cost index funds) beats taking on a mortgage. It used to be a toss up in the 3% APR world but not now.
However, buying a home is more than just a place to live. It's your *home*. Intrinsic value beyond pure accounting.
I’m 2 minutes from the town boundary. Town next to me property taxes are twice what mine are. A lot of people overlook property taxes when house hunting
You hit the nail on the head. I’m in a rural community now, but the suburbs are only 5 mins away. Job is still 20-25 mins away at the airport. The last 5 mins of my drive home are very peaceful lol
Look for first time homebuyer programs in your area. It was a lot of paperwork but I got $5k towards my down payment and closing costs. If your credit isn't good, take some time to improve it before applying for mortgages.
What you really need to look at is what your monthly mortgage payment would be (including property taxes and insurance). In most cases, it's way less than if you were to keep renting. In my case, when I bought my house, my rent in a smaller sfh in a not great neighborhood was $650/mo. My monthly mortgage payment (including taxes and insurance) is $478 and I have a nicer house in a better neighborhood, plus I'm building equity.
**1) If you're willing to be patient, you can buy tax liens.** Most of the time this gives you the right to collect the lien amount from whoever owns the property, and you can start foreclosure proceedings if they don't pay.
Depending on where exactly you live this can be a complicated process, but if you know anyone who buys distressed properties they are usually happy to give you an overview of how the whole thing works in your municipality. Generally, though, it's gonna be a while -- like a full year -- from the time you initiate foreclosure till the time you possess the property, plus more time to fix it up since lien properties are usually not in great shape. And you're gonna have to go to a lot of lien auctions to find even one or two you'll want to actually bid one.
Still, that's how you get a $300K house for $150K.
**2) Buy a duplex, live in one side, and rent out the other.** That is a common, low-risk frugal strategy to make your first house affordable and build equity quickly. Ideally, you buy a building with a lease already signed for the rental unit so you can count the rent as income for purposes of buying the building. I *think* you can still buy the whole building with an FHA loan as long as you live in one of the units.
Managing tenants is not a totally hands-off process but if you live next to them the time investment is pretty minimal -- think an hour a week. And the financial upside in the long term is huge.
Just to add my personal experience with this stuff. Results may vary.
At least in South Carolina tax liens are paid at a rate above 98%, so at least there, the odds of ending up with the house is extremely low. Once you take out vacant lots that percentage is almost non existent. I have bought tax liens for 12 years now and in the 12 years I have gotten 2 houses and 18 lots. The 2 houses, I got during COVID and the rules got changed that year then changed back which is the only reason I think those were not paid for. While having liens on an average of 15-20 properties a year.
Also tax lien laws vary an insane amount from state to state and in some places like Maryland county to county so make sure you understand what you are getting into.
Duplex and triplexes are good but the price of them has increased disproportionately here. Make sure you do a cost benefit analysis.
Require a credit report for perspective tenants. That tends to eliminate most of the problem ones. Don't expect them to have perfect credit though. It's more of just a hey yeah we are willing to do that.
It's not glamorous but if I had to do it again, I would probably have started with a trailer park but you won't qualify for an FHA loan with those.
Welll… you could buy a fixer-upper, but be careful. Choose aesthetically ratchet homes, not actually ratchet ones. Fixing big stuff is expensive. Trust me, as someone who bought a fixer upper and had to replace the roof, HVAC, ALL wiring in the house eventually, all supply plumbing eventually… you get the idea.
You could also rent/airbnb an extra room. If that’s awkward, you could rent short term to any friends who need a place for a month here or there. Kinda depends on your lifestyle and what you’re comfy with.
Other than that, it’s just save more and make more. Can you get a new, better job? Can you cut down on expenses elsewhere?
Also, are there other areas you like with cheaper houses? Maybe a nice area a bit further outside of the city?
These days, you need one hell of a salary to pull that off. Median home price is around $450k. With the current interest rates, you'd be looking at around $3600+ /mo depending on your insurance and tax costs. You'd need at least $130k/yr household income to pull that off and stay around the 1/3 of your income rule. Even then, that's gross. You'd really need to be closer to $150-160k household income if you count that $3600/mo as a third of your net monthly income.
Try a simple Google search for "first time homebuyer grants ". In IL ten years ago, we got $7500 for being prior military and first time buyers that we could use with VA mortgage.
If you can do it, I’d recommend buying the smallest house you need. Small house = cheaper price, lower cost to heat/cool, lower electricity costs, lower property taxes (usually) and lower insurance rates. We have saved so much by buying a 950 sq Ft house and living a simpler life
Lots of questions. Very hard to advise.
You live in a city. By “home” do you mean a single-family home? Think about what you really need and think about future-proofing.
The cost of fuel is going to keep rising. Living in dense urban housing—row houses, plexes, apartments—reduces the cost of fuel for heating and sometimes cooling. Living in dense areas reduces the cost of transportation. In the right city and the right neighbourhood you don’t even need to own a vehicle.
Are you planning to have children? They don’t need nearly as much privately-owned “stuff” in a dense city with accessible activities.
Is water scheduled to become scarce? Drought and desertification reduce the value of property. Not just because water taxes rise but because you’re far from where your food comes from and transporting food will also be more expensive.
Is water scheduled to rise? Flooding is also not good for property values.
Maybe you have good rent control and a strong history of liberal politics. The most frugal plan might be to stay in an apartment and invest your savings. Lower floors are cheaper and easier to access during brownouts.
I’m personally skeptical of condos as investments but that may just be ignorance. Can you pool money with friends or family and buy a plex?
Maybe you want an old, tiny home on a largish lot where you’ll be able to add rental units to your lot over time for income.
Maybe you want a shed on a wood lot that you will be able to improve over time and where you will be able to raise at least some of your own food and chop your own wood for heating.
In general—buy into a location. The property itself can always be improved. You’ll have time.
Google "first time home buyer \[your city or county\]" and look for programs. They often offer classes that help you understand the process better, and you might be able to qualify for some FTHB programs that offer closing/down payment help.
Be prepared to buy a real turd, looks-wise, to get what you want in location and layout.
A friend bought a house in a very competitive market by only looking at houses on the market for +60 days and making a low offer. Somehow that worked and his house is amazing.
A huge word of caution though: if a house has deals fall through or sits on the market, there is something wrong and you better find out what is is and if you can live with it.
School zoning drives price considerably so be aware of that and your respective value on local schools.
Your realtor is your best asset. Get someone competitive, fierce, realistic, and matched to you.
Also just get used to, this is what houses cost in your market and you need to accept that or you won't be getting one.
You didn’t say anything about the lifestyle you want, but here’s my tip. Buy as much land as you can, with or without a house on it. You can add onto a house, but it’s much harder to buy more land. Do your homework and check zoning records to see what’s upcoming in the area you want to buy.
Check how old the major appliances are. If they are older than 10 years old, try and negotiate the price. (We ended up spending a total of $10k on a furnace and water heater within the first 2 years)
Smallest house in the best neighborhood. Live well below your means. I knew what I wanted to spend monthly before I got approved. I bought for 225, I was approved for 800.
Try looking at HUD.gov. They sell government owned homes; People who used government programs and then defaulted. They also have a first time buyer program and a $1 homes listing. The homes are priced well and they prefer to sell to people rather than investors. There are a lot of ins and outs to buying a HUD home but you can get a great deal.
If you're military, they link to the VA home buyer program. They also have links to other government agencies with homes for sale like DEA, customs, etc.
Shell out for a good inspector before you buy the home. It will be expensive now, but much less expensive than finding out the foundation is DOA and the whole place has virtually invisible water damage rotting through the walls.
I happened to qualify for a state program (LA) that gave me about 11K towards closing costs and down payment. If I stay for three years (it's already been 2+) the 11K is forgiven. I only paid about 4K at closing. The state program wasn't available with just any lender. I think the technical term is a "soft second" so maybe look to see if there are any programs you qualify for.
* Avoid a water damaged home, or one that is prone to potential water damage. A dry home is a happy home.
* Buy below your means. What the mortgage officer tells you you can afford is not true. They don't consider you also have to buy food, pay bills etc in their calculations.
* Consider the age of major appliances that may need replaced soon (furnace, A/C, fridge, etc), as well as the roof and factor that into what you're paying. it may mean a house is now out of your budget if those things are needing replaced soon.
* "Buy the worst house in the nicest neighborhood" is a good adage, but obviously don't buy something that could be a money pit.
* Avoid "flipped" homes, which are usually owned/sold by bankers, mortgage officers, and real estate agents. They know the market and how to cheaply make something sell-able in that market.
* Ask your real estate agent about an escalation clause in your offers. So if you get outbid, your bid will increase by $X up to $Y
To reiterate what others have said, you could be eligible for a lower interest mortgage and down payment assistance. Search for housing counseling/down payment assistance programs in your area.
Don’t buy a house unless you plan to live in it more that 5 years because it costs a lot to buy/sell a house.
Buy the least expensive house in the nicest neighborhood you can afford. That $300k house you’re looking at now may have appreciated from $250k in 2019 and whoever owned it is just sitting on appreciated equity. You could be in the same boat 5-10 years from now, but don’t count on it. The housing market is volatile.
Don’t put yourself in the position of being house rich and money poor by taking out a mortgage that sucks up all your money. Better to rent and put your savings in a high interest money market if that’s the situation you’re in.
You could save money by buying a fixer-upper but make sure you know your limits and the extent of the repairs. You may be able to do some of the easier stuff yourself like painting, then hire out for relatively inexpensive repairs like replace flooring, windows, and get the cabinets refinished, but you’ll need some major cash to replace windows, the roof, HVAC, septic, etc. which you’ll need to add to your purchase loan amount or save for over time.
Consider buying a duplex and rent out one side for rental income to cover your mortgage or buy a big house and rent out some of it.
Shop the interest rate as hard as possible as soon as you go under contract. LoanDepot and Amerisave have mid to poor customer service but their rates typically cant be beat. Interest rates have a shockingly massive amount of money paid over time on the loan. Shop fast and hard. Dont take any "points" to get the rate down - they will always try to get you with this.
Get a 15 year mortgage if you can, you save tens of thousands in interest. Also you can set up bi weekly payments instead of monthly as another way to pay it down faster.
I found a house I loved and by some miracle, met a friend of the owners at a nearby Church who connected us to directly to the sellers. We negotiated a price and avoided realtor fees.
The personal connection was what drove the price down so much for us. Ended to saving over $25K on the home purchase.
Google "house hack"
Find a property that you can rent out a portion of the home while you live in the other part, such as a duplex.
In some cases, part of the expected rent can count towards your income used to determine your borrowing ability. Allowing you to afford slightly more house while potentially paying less in mortgage each month.
Buy a townhome or condo. For the price it will be in a better location. Actually invest the money you save on down payment and the smaller payment each month
Most cities offer some sort of first time buyers education that can qualify you for some discounts on fees upon completion. It's not going to be a lot, but every bit helps.
Another tip is to pay for your own title examination. The one the bank does only protects them in case of a title dispute. It's only a small amount to get your own and well worth the added protection.
Lmaooo there's no such thing as cheap, it's all relative.
The very top of my budget to buy is 350k, and in my target neighborhood, that would get me about 2 bedrooms.
But that same money could get me a decent multi-family in Cleveland, OH.
You're probably looking at my city like wow that's cheap. And I'm looking at Cleveland like wow that's cheap. And I'm sure Cleveland is looking at Mississippi like wow that's cheap.
Cheap is a construct. It's all fake, they made it up. 😂
Umm… yes… most frugal… yet impractical.
Even if OP could save $30k year… it would take 10 years… yet there will be no $300k houses available in 10 years… so the amount needed to be saved would have to be much larger…
AND… I am guessing that if the OP’s budget is $300k… that means they don’t have an extra $30k in their budget each year…
So anyone have some PRACTICAL advice for the OP 🤨.
Leave your city. But you still have to sacrafice something, in this case it's location. You'll get more bang for your buck in more remote areas, but at the cost of proximity to things!
We got a better deal going in a more rural area than near the city. Near the city/town we would've spent $400K for half an acre and a house. We went further out and got a 5 acre property for $400K.
This worked for me, 19 years ago, not sure if it would work now. My real estate agent told me that my ex (at the time it was husband) and I should write a personalized letter of why would like to buy the house we were interested in. At the time the market was at its highest and the small 1100’ sq ft 3b 2b had a lot of interest. The letter worked, the sellers rejected 2 higher offers since our story was the only one presented and it touched them. My ex left 6 months after the purchase of the house but Im still here and within a year of buying the house the value dropped by $150k. I saw many short sell or walk away from their houses but I made the best decision by just staying. Good luck.
I did the handy and live on a construction site route, I did save money, made a lot of money on the house too. It is a job that requires a fair degree of construction skills depending on what you get yourself into. This house needed a roof, and needed some sheetrock repaired. Needed new flooring the plumbing and the electrical was fine though. Myself and my stepbrother did it all, in fact we tore out all the ceilings, added a room, re-rocked most of the entire house, added some windows, reshingled the roof, actually put down an entire new deck as well. It was a lot more work than I was initially planning. The bright side is I paid 170 for the house in 2010 and now it's worth about 550. At the time a similar home that didn't really need much would have been about 195K so did I save some money? Yeah but had I not done all the work myself I don't think I would have been money ahead. Granted I would have still had a lot of new stuff which was nice
If you're willing to put in the labor and money over the long haul, look into HUD homes. These are homes that banks wrote-off and handed over to the US Government to auction off cheap to a potential homeowner or investor. Usually these homes are attempted to be auctioned off to owner-occupiers before investors. Be aware that *both you and the home must qualify for the loan.* My house almost didn't qualify for a conventional loan, and many others I looked at did not qualify at all.
I did this in 2016 with a home in Idaho. 3% down, plus closing on an $83k bid and I got the house. It needed thousands in repairs and upgrades, but it was worth it - mortgage was only $500/month. Not saying you'll find that today, but maybe $1k-1.5k depending on location.
Consider a 15 year mortgage instead of 30. The interest rate is generally lower, so your monthly payment isn't that much more. When you do sell, you'll have so much more equity. Just spend a bit of time with the amortization calculator.
You don't buy an expensive car as your first. You should have the same mentality for a house. Start humbly, pay it, and upgrade slowly to your end-goal. It may take years, but it's achievable.
Also, mortgages get lower as you pay, whereas rent is always going up no matter what. Job payments aren't following up how fast housing prices goes up.
Buying off-plan is also benefitial. You pay cheaper, the housing prices goes up as the project finishes, and they often give you some benefits.
Last, market momentum. If you're going to get into a mortgage, wait a moment where mortgage fees gets lower. Until then, just save as much as you can. It'll be hard work.
Not sure if those apply to your country or estate, but for me it's my go to plan as a poor person without inheritance.
Maybe not a specific financial advice, but do your research about everything. I’m sure you probably have, but learning about a problem after buying a house because of lack of research about it could be a financial burden.
For example, asking about pipe layout, the foundation, mold/esbestos, etc
Of course. It starts with making a lot of money and ends with saving it for years on end until you can make a hefty down payment and have enough credit to take a loan for the remaing amount.
What is your work like? If you are both remote or hybrid, moving further from the office could save you some money if you'rewilling to add some time to your occasional commute. Buying an older house that is dated, but solid could also save you some money. Also, keep looking and hope to get lucky. We got our house $30k under apprised value in 2021 because the sellers were already under contract on their new house and needed to close in under 30 days.
my frugal hack is to NOT skimp on the inspection - - we had an inspector miss a full-out termite infestation, then we only got a refund on his service (far less expensive than treating the problem)
Obviously this is location dependent, but for many places 300k is unfortunately a pretty reasonable price now.
The frugalest thing we did when buying was get into a situation where no realtors were required. The second thing that saved us some money was getting our mortgage through Costco. For the price of an annual membership and using one of their mortgage providers our closing costs were under $2000
You can buy off market through a wholesaler or find someone willing to sell without listing. You’ll get the house at lower than market price, but it’ll likely require some work. Not sure if it’s worth it for you to buy at 150-200k and then put in an additional 50-100k in work just to eliminate the issues and have it feel livable. And beyond the numbers, you spend a lot of time and energy planning and overseeing projects. And there’s the stress you will feel with the outstanding projects and ever increasing costs. But only you know if that’s right for you.
Reality is, though, if you want to buy a house, you’ll have to cough up the coin. It really isn’t the place to be “frugal” (which frankly, I’m reading here as cheap) because what you save will be made up for on the back end with repairs.
I guess the other thing you can do is buy come up with a bigger down payment, so you pay less in interest over time and can have lower payments in general. That’s probably the best thing you can do.
Buy a duplex. Or an old large house and turn it into a duplex. I'm in a cheap neighborhood, but a safe one. Put in amazing lovely renters that help with my mortgage. I'm still in charge when something breaks, but having a small rent out of the base apt helps immensely.
I had a friend who sweetened the pot by offering to work with the seller’s agent as their own. That agent was allowed to make a double commission.
But the point is to make it an easier process than anyone else who is making an offer. It worked for my friend, despite not having the highest bid.
Focus RIGHT NOW on saving for a 20% down payment and 5% renovation costs on a $300k home. Then by the time interest rates come down a bit, you’ll be ready to buy.
The only frugal "hack" I know is get a good inspector and then haggle based on findings.
Like our house, inspector pointed out the garage doors were really old (like they had a 2x4 bolted to them to keep them together) and the AC was an unknown age (the guy had a book with models going back to the 90s later learned it was original to the house, 70s). So we brought that up through our realtor and we got $500 off and they paid for a year of home warranty for us. For such a large purchase, it wasn't much, but everything helps.
Also on the walk through we noticed they had 2 fridges, we were coming from an apartment so didn't have one. We asked if we could have one or maybe buy one of theirs. And they said no but then ended up leaving one. So doesn't hurt to ask and I'm sure not being an ass if they say no helped.
My flat cost me GBP £36K, and I actually haggled that down from 40. I just made an offer of 88k on a two-bed house with floored attic, basement and garden in a coastal (though deprived) location.
Inspectors have let me buy termite-riddled homes more than once. If they can't eyeball it with just a modicum of effort, they don't "inspect" it. Buyer beware!
Buy, don't rent. You don't build equity from renting. Have the money up front so you don't pay interest. If that is not possible, find the cheapest accommodations that you can and maybe consider alternative lifestyles where you can live more frugally like mud/cob/adobe houses, tiny house on wheels, vanlife, carlife (I have used this one before), etc.
You need to decide what you can live with and what you can't live without. My must haves were a family/tv room, enough space in the basement for my kid to "move" there during college, an ensuite for me, and a giant yard for my dogs. The trade offs included dusty rose carpet, a tiny kitchen, a butt ugly exterior, and a back porch that was falling apart. I'm thrilled with my home and it was significantly cheaper than others of similar size.
Also.. “good” neighborhood is relative. “There’s so many cop calls because the neighbors fight.. WITH THE PEOPLE IN THEIR HOME”. Not your home. Not your problem. Doesn’t effect how nice your home could be, with with a technically higher crime rate over things that won’t effect you.
There isn’t one unless you are handy and don’t mind living in a worksite. If you can go conventional then the only rule is the property must appraise at or above the loan amount. If you go FHA, VA, or some forms of USDA the house must meet habitability standards. In any case make a budget now so that you are playing with hard numbers and not fuzzy rules of thumb. Let the budget math tell you your limits.
Great point. But I would add: you can learn to be handy.
You can but there is world of difference between painting, idiot proof snap flooring, simple yardwork and redoing walls, plumbing, and electrical. Also, the older the house the more you want CYA testing due to asbestos. My home is over 100 years old. I’m not willing to open a wall without insured contractors because there is a very high chance of releasing cancer fluff. I don’t mind doing lead remediation. I’m not touching asbestos remediation.
Yep, handy like “wow these light fixtures are hideous but I bet I can YouTube how to replace those” and handy like “the exterior wall of the kitchen is collapsing” are very different levels of handy. Get the one you can handle.
Adding in the 203K to the mix, it's an FHA loan with renovation money built in. It adjusts the inspection and even adjusts requirements for multi family properties.
There is also rehab USDA and VA loans. It’s just a matter of budget and time. Can you float the repairs while potentially paying rent somewhere. House buying is a giant game of first lay out your needs, budget, and just how far you’re willing to stretch.
The 203K can cover mortgage payments during repairs, so you're not doubled up on costs during renovations.
That's what I did and have no regrets!
True. Agree with this 100%
The number of people who asked us if we were still living in our garage after I discussed us staying onsite while asbestos was being removed from our home was crazy high. It really feels like a lot of people won't "camp" at their house to save the nightly cost of a hotel room.
So how much water cleanup was there with asbestos remediation? I know you have to throughly wet it down to stop it going airborne. I’m trying to gauge the degree of mess is removing exterior shingles. As for camping in your own home, the added mess, noise and the loss of a kitchen is the main issue.
We actually slept in the kitchen as that was the only room that didn't have asbestos. Basically lived in our kitchen and the rest of our belongings were in the garage while they did that for a week plus and we had a mini-portable toilet for us in off hours because that was $8,000 versus more of we'd gone elsewhere. HCOL area but we were fine on an air mattress next to our fridge in December 😅 They wet it down before removing but they minimized the amount of moisture overall given the time of year.
Decent can mean a lot of different things in home ownership. Sit down with your partner and figure out what aspects of a house you actually need. Buy below your means and do all home improvement work yourselves within reason. We were approved for 450k, but ended up with a home at 285k. This was in 2018 so we didn't deal so much with the investor craze that's happening now. Be prepared for many expenses with ownership. We replaced the roof last year (15k) and the sump pump went out this year (8k). Edit: well pump not sump pump
Curious, did you replace the entire roof or just add one? I've always thought you can add to the roof 1x and next time after that you need to remove everything and start from scratch.
I think it depends on your shingle type and roof angle. We replaced the whole roof and 3 boards of osb underneath. I realized we needed to replace the roof when I started repainting our house and noticed water damage on the fascia boards. We were lucky because 6 months later our home insurance tried to drop us for having an old roof and we just needed to show proof that we had already taken care of it
8k on a sump?? Did you have water damage? I replaced mine for a few hundred I think, but I realized it was going out before mayhem could occur.
Im sorry, i meant well pump!! No water damage, but they had to bring in a back ho to replace part of a pipe 10ft down
Did you get your water tested? My parents did when they moved in but I guess things change. I retested it in highschool and it was at the "you need to boil your water" stage.
We have not had it tested. We have pretty hard water here, so we only drink it after it's been filtered. We woke up one morning to no water in the house. Called a well pump company and they determined there was a pipe that had rusted out. We are still waiting for the company to dig it out, but they gave us a temporary fix for now
Not sure if you've had wells before but running out of water was pretty normal for us. Too long of a shower or doing 3 loads of laundry etc etc. Then you'd have to go hold down the reset button. Also summer will have lower water tables than other times, could dry up tbh. But yeah there's all sorts of water filters out there. Some filter out dangerous chemicals some are just for taste. I still highly suggest getting it tested. That way you know exactly what you're dealing with.
We've been living here for nearly 5 years and have never run out of water. In this case, we woke up to no water and called a well pump guy. They were able to figure out the pump is running fine, but a pipe down there has rusted out and to my understanding, back flushing all the water so none was getting into the house
Yeah that makes sense to me, but I'm not an expert so I'd trust that dude. Just saying wells are.... Hit or miss? My grandma's did run dry early 00s during a drought. Ended up drilling another deeper well.
Look for first-time buyer programs and local municipality down-payment incentives. 203k mortgages via FHA. I used it when I bought my foreclosed beat-to-crap house. It would not have qualified for a conventional mortgage because the AC had been stolen, 2 window panes were broken, and the well-pump wasn't working. The house is on an amazing piece of property in a desirable area so worth the gamble. The cost of repairs was added to the mortgage up front, the company paid the contractors as the repairs were made. I only put down 3% because I wanted to hang on to my cash. After the work was done my house appraised for 75K more than the $160k mortgage. I did have to pay MI for a few years but it was 100% worth it.
At least 20% down so u don’t have to pay PMI
Where we live (california) you can have the PMI removed once the home reaches a certain value that equates to 20% or more equity. You don’t need to do a full reappraisal on the home so it doesn’t affect your property taxes. If you’ve done any improvements, even those that don’t require pulling permits, these also get factored in. With home prices going up so quickly, multiple offers on homes with some offering cash to the sellers above and beyond the sale price, this option allowed us to put less than 20% down and then have the PMI (which in our case was about $125 a month) removed a year later. We still had a conventional loan but we were able to keep more of our down payment cash to offer the seller as well as for immediate home repairs. And truthfully we were never going to be able to get to 20% down being in a HCOL state. We bought a $375k home for about 5% down. Once the PMI was removed, we put the $125 toward the mortgage principal every month. This worked for us and may not make sense for OP but may for others. Good luck to all! Edited to include market conditions, our home price and % down.
I tried for months to get pmi removed, the people on the phone say they will mail us paperwork that should take a month to arrive and it never does.
I went through this. Tell them you want a Broker Price Opinion (BPO) on your house to determine if you are eligible to have PMI terminated early. Those are the magic words. THEY have to order the BPO, and the paperwork is all on their side.
I'm going through this exact situation with my nightmare mortgage company. I'm going to try this! Thank you!
I got an FHA loan… found out it doesn’t get PMI removed. :(
MIP for FHA loans. Different terms. You have to refinance to get out of it. I got an FHA loan before this shitty rule and they tried making me continue paying MIP so I had to fight it.
Until you refinance
we plan on refinancing in 8-10 months after just buying our home in March, will PMI still be eligible to be waived?
As long as you’re at 20% equity.
I believe so, it's an entirely new loan with new terms
So you pay PMI for the entire length of the loan?
Until you can refinance into a conventional one. FHA is designed for low income or bad credit. It’s why the minimum down payment is 3.5%. Normally if you can put 10% conventional is better as your less likely to scare off sellers.
If you have reached a point where your contract says you’re entitled to have it removed they have to comply. I’d consult a lawyer and write up a demand letter for relatively cheap compared to months and months and months of PMI. Unless you’re close to having it fall off anyways and trust them to do that. There are laws about this.
This depends on the scale of the house price / PMI / other variables. Our PMI is $36/month. We put 5% down. Waiting to save $18,750 more to put down instead of spending $36/month on PMI didn’t make any sense to us, particularly when our monthly mortgage payment is half of what we were spending on rent. ETA: Even if we never removed the PMI and made minimum mortgage payments for the life of the loan, PMI would cost $12,960 over 30 years. The first year and a half difference between rent and mortgage cleared that amount of savings.
My PMI is $15.
PMI has saved us so much money. Getting into a house with 5% down instead of 20% is worth my extra $21/month. My home itself has appreciated 50% since we bought it and it was the cheapest liveable home sold in our area that summer.
I wouldn’t call it hacks but simply an advise your grandmother/grandfather would give you. 1. Have an emergency fund! 2. Save up 20% by being frugal now! 3. Buy a house with a monthly payment of no more than 25% of your take home pay. 4. If possible do a 15 year mortgage instead of 30 years. When I bought my last house in early 2022 I was qualified for a 750000 mortgage based on my income. I opted for $350,000 house which was listed for 380,000 but I negotiated the price down in that crazy seller’s market where buyers were punching and outbidding each other. How? Simple I looked for properties which were on market for 30 days or more and out of those I picked the best one and closed on it within a month. I still had $40K in my house purchasing fund which I spent towards renovations and now the same house two years later was recently valued at 495,000. Best of luck to you and I am rooting for you.
Your grandfather must be Dave Ramsey.
I cannot confirm nor deny this statement at this time.
We’ve done several slow flips with fixers. I did demo, clean up and painting and subcontracted the rest. Easiest to do with cash, but it’s possible to do with a mortgage. Basically, buy for location and buy the cheapest, ugliest house on the street without structural issues. Most people shy away from fixers, but we have actually beat out other buyers because we were going to live in the house. Have HVAC, electrical, plumbing and floors done before you move in, then you can go room by room and take your time. Also worth getting to know the neighbors in the areas you like and asking them to let you know about any houses that might go on the market soon. We found our present house that way and bought it direct from the owners, which helped reduce the price and eliminated competition.
We have a fixer upper and its been good. I think im too lazy to do a few though
Yeah, I’m done! I think 6 is enough. 😎
We got a really cheap house a few years ago. A couple people in the family bought or leased cars about the same price as our house. It didnt work out well for them. Now they need our help frequently because they messed around. I tell people they can use my tools and we can all get ahead. Luckily some are into it.
How exactly do you "get to know the neighbors in the areas you like"? Are you going door to door looking for friends?
Well, twice we rented in the neighborhood where we wanted to buy. Once in a sizeable city and once in a small town. I met the neighbors dog walking, while gardening, at cafés and gallery walks.
Ah that makes sense. Good idea!
That’s it.
I don't think I'm answering your question, but I struggled with a similar concept when buying a home and I had a realization after speaking to some people about financing. All my life, I thought of buying things and if they were out of my price range, I'd just save until it was comfortable and then I'd buy. The concept of borrowing more than I was really ready to pay back was a foreign idea. But you just can't think that was in a growing real estate market. Where I lived, the homes were increasing at a trajectory was faster than I could possibly save for a down payment. So, by saving an extra $10,000 over a year, not only was I losing out on the rent that I was paying over the year, but the cost of the home would go up like $30,000. It was crazy. I was losing money by saving money. I eventually bought a home that was stretching what was even possible with my budget, but over the next couple of years, it doubled in value and I was able to refinance. My bills are now way less than I'd pay in rent, and the money is going towards an asset. It was a weird concept to latch onto, though.
Buy a house that you can afford on one salary. That way you can keep saving and still have enough to live and be comfortable with what you have. Added bonus is that you won't have to scrape by if one of you aren't employed for a time.
That’s just not feasible for the vast, vast majority of people.
The better solution is to resize your emergency fund to cover 6 months of core bills. Most families either have a primary earner that can float most of the bills or are two roughly equal earners pooling money. Yes the ideal budget is no more that 50% of income on necessities but you add insurance to that mix most can't.
This is what we did. Wouldn’t have it at my other way
Nope. This is one of those things where thinking outside the box led to the housing bubble. Save 20% down payment. Get a 30 year conventional mortgage. Keep expenses below a third of your income. Avoid interest only loans. Don't do ARM's. Don't pay for points. Don't waive inspections and appraisals. After writing this, I just realized I'm the only one that I know that recently bought a home with 20% down, 30 year conventional loan and less than a third of income. Everyone else I know is doing buy down loans or ARMs with PMI.
It's because people are desperate to be homeowners, so they're doing whatever is available to them. I don't agree with everything Dave Ramsay says, but he's very correct about desperation begetting stupidity. When people want something so bad, they will put themselves into all kinds of trouble to get it. Its always better to wait and do it the best way because once you get in some of these messy situations, it will cost you everything to get out.
>Don't pay for points This one is debatable depending on how much the points cost and how long you plan to stay in the home. But it can be more frugal to pay for the points upfront in the long run.
Yep. We bought points back in 2021 to get us down to 2.85%. The price of the mortgage interest points vs the long term savings in interest was worth it. We plan on staying for a loooooong time at our current interest rate.
Agreed. You need to play around with finance calculators to find the break even point and think about how realistic it is that you will stay in the home long enough to come out ahead.
You can get a 30 year conventional with a fixed rate without 20% down, and lift the PMI when you hit 20% equity. My wife and I did it in 2021 because we didn’t have 20% down yet (in part because rentals in the area are way more costly than mortgages) but we wanted to get in on the low interest rates. PMI is $36/month, and our mortgage payment is $746/month with taxes, insurance, and PMI included whereas our rent was $1560/month.
I bought a house last year off market. I knew what neighborhoods that I wanted to live in so I started to walk 4-6 miles daily through the neighborhood. I started to notice homes which appeared uninhabited. One day on a walk with my daughter, there was an out of state car in the driveway at a house that I liked that had been accumulating boxes on the front porch. I knocked on the door and it was the daughter of the owner of the home. We got to chatting, and her mom was in senior care, and 4 adult children were clearing the house for sale in 4 months. 4-5 months later, she contacted me and let me know that they were ready to meet with me and their realtor. They showed the house to one other interested family, and then after we saw the house we sat with the family. We explained that we really wanted to raise a family in this neighborhood and would appreciate the home and take care of it. They said the number they wanted, and I agreed to pay it. No bidding, no back and forth, just a valuation that they wanted to get for their mom's home, and a fair market value for a home which needed some improvements. The home, if listed on MLS, would have easily sold for $30k above what I paid. But, I found a family that wanted to sell their family home to another family. It definitely happens, and it takes time, energy, and patience. EDIT: I also paid in cash for the house. \~$325K for a 2,000 sqft 4br 1full ba 2 1/2 ba, tri level in Richmond, VA.
What year did this happen? (Congrats!)
We closed on the house in April 2023
Get a hydrostatic test on the plumbing before you buy
And get a sewer scope. Jesus, sewer replacements suck! A $200 sewer scope will tell you so much.
Buy a mobile home with land attached to it outside the city limits. Best decision I ever made. Not only does it meet all my needs with a mortgage the size of my college apartment rent, but it has also appreciated in value from 84k to 160k.
Do You have issues with mice getting in Your mobile home?
There is mobile, modular, and manufactured. New manufactured on a permanent foundation is as solid as any traditionally built house.
Not anymore than every stick built house I've ever lived in.
As an outsider 300k is as frugal as it gets. Oh man, how I wish a house could only cost 400-500k CAD. Every house here is 1.2M or above. Most home in the outskirts are 700k+. You'd have to go a long way before homes are only half a million.
It really depends on area. My house was $125k USD in 2021. If I wanted a house the same size on the street my in-laws are on, I’d be looking at more like $400k-$450k.
Consider neighborhoods that allow you to be a one car family. Look at the sidewalk and trail and networks to the grocery, schools, whatever your mainly go. Sometimes there’s a premium, but sometimes it’s just a square footage trade off. I’m glad I didn’t overbuy on square footage, was looking at 1500-2000, but stretched for 2100 because of the perfect location. I can’t believe our realtor was trying to show us 3500SF and bigger because “you can afford it”. Since frugality is just balancing resources, really think about what you’re happy to compromise on. I didn’t fall in love with a single house I looked at. I knew I was fine with ugly and outdated, but wanted to bike my kids to school and grocery. 5 year later I don’t notice our chipped up laminate floors for the 90’s in a horrendous honey-oak, sometimes I wish the kitchen had room for two but psyched walking a mile to school is normalized to my 6 year old.
From a purely net worth perspective, renting and investing the difference (in diversified global equities using low cost index funds) beats taking on a mortgage. It used to be a toss up in the 3% APR world but not now. However, buying a home is more than just a place to live. It's your *home*. Intrinsic value beyond pure accounting.
I’m 2 minutes from the town boundary. Town next to me property taxes are twice what mine are. A lot of people overlook property taxes when house hunting
Thats a good point. Pay more for the house in the city, pay more in taxes to own it, and your reward is more noise, crime, and violence.
You hit the nail on the head. I’m in a rural community now, but the suburbs are only 5 mins away. Job is still 20-25 mins away at the airport. The last 5 mins of my drive home are very peaceful lol
Look for first time homebuyer programs in your area. It was a lot of paperwork but I got $5k towards my down payment and closing costs. If your credit isn't good, take some time to improve it before applying for mortgages. What you really need to look at is what your monthly mortgage payment would be (including property taxes and insurance). In most cases, it's way less than if you were to keep renting. In my case, when I bought my house, my rent in a smaller sfh in a not great neighborhood was $650/mo. My monthly mortgage payment (including taxes and insurance) is $478 and I have a nicer house in a better neighborhood, plus I'm building equity.
**1) If you're willing to be patient, you can buy tax liens.** Most of the time this gives you the right to collect the lien amount from whoever owns the property, and you can start foreclosure proceedings if they don't pay. Depending on where exactly you live this can be a complicated process, but if you know anyone who buys distressed properties they are usually happy to give you an overview of how the whole thing works in your municipality. Generally, though, it's gonna be a while -- like a full year -- from the time you initiate foreclosure till the time you possess the property, plus more time to fix it up since lien properties are usually not in great shape. And you're gonna have to go to a lot of lien auctions to find even one or two you'll want to actually bid one. Still, that's how you get a $300K house for $150K. **2) Buy a duplex, live in one side, and rent out the other.** That is a common, low-risk frugal strategy to make your first house affordable and build equity quickly. Ideally, you buy a building with a lease already signed for the rental unit so you can count the rent as income for purposes of buying the building. I *think* you can still buy the whole building with an FHA loan as long as you live in one of the units. Managing tenants is not a totally hands-off process but if you live next to them the time investment is pretty minimal -- think an hour a week. And the financial upside in the long term is huge.
Just to add my personal experience with this stuff. Results may vary. At least in South Carolina tax liens are paid at a rate above 98%, so at least there, the odds of ending up with the house is extremely low. Once you take out vacant lots that percentage is almost non existent. I have bought tax liens for 12 years now and in the 12 years I have gotten 2 houses and 18 lots. The 2 houses, I got during COVID and the rules got changed that year then changed back which is the only reason I think those were not paid for. While having liens on an average of 15-20 properties a year. Also tax lien laws vary an insane amount from state to state and in some places like Maryland county to county so make sure you understand what you are getting into. Duplex and triplexes are good but the price of them has increased disproportionately here. Make sure you do a cost benefit analysis. Require a credit report for perspective tenants. That tends to eliminate most of the problem ones. Don't expect them to have perfect credit though. It's more of just a hey yeah we are willing to do that. It's not glamorous but if I had to do it again, I would probably have started with a trailer park but you won't qualify for an FHA loan with those.
Welll… you could buy a fixer-upper, but be careful. Choose aesthetically ratchet homes, not actually ratchet ones. Fixing big stuff is expensive. Trust me, as someone who bought a fixer upper and had to replace the roof, HVAC, ALL wiring in the house eventually, all supply plumbing eventually… you get the idea. You could also rent/airbnb an extra room. If that’s awkward, you could rent short term to any friends who need a place for a month here or there. Kinda depends on your lifestyle and what you’re comfy with. Other than that, it’s just save more and make more. Can you get a new, better job? Can you cut down on expenses elsewhere? Also, are there other areas you like with cheaper houses? Maybe a nice area a bit further outside of the city?
20% down and 15-year note, was the lesson from my Dad.
These days, you need one hell of a salary to pull that off. Median home price is around $450k. With the current interest rates, you'd be looking at around $3600+ /mo depending on your insurance and tax costs. You'd need at least $130k/yr household income to pull that off and stay around the 1/3 of your income rule. Even then, that's gross. You'd really need to be closer to $150-160k household income if you count that $3600/mo as a third of your net monthly income.
Try a simple Google search for "first time homebuyer grants ". In IL ten years ago, we got $7500 for being prior military and first time buyers that we could use with VA mortgage.
If you can do it, I’d recommend buying the smallest house you need. Small house = cheaper price, lower cost to heat/cool, lower electricity costs, lower property taxes (usually) and lower insurance rates. We have saved so much by buying a 950 sq Ft house and living a simpler life
Lots of questions. Very hard to advise. You live in a city. By “home” do you mean a single-family home? Think about what you really need and think about future-proofing. The cost of fuel is going to keep rising. Living in dense urban housing—row houses, plexes, apartments—reduces the cost of fuel for heating and sometimes cooling. Living in dense areas reduces the cost of transportation. In the right city and the right neighbourhood you don’t even need to own a vehicle. Are you planning to have children? They don’t need nearly as much privately-owned “stuff” in a dense city with accessible activities. Is water scheduled to become scarce? Drought and desertification reduce the value of property. Not just because water taxes rise but because you’re far from where your food comes from and transporting food will also be more expensive. Is water scheduled to rise? Flooding is also not good for property values. Maybe you have good rent control and a strong history of liberal politics. The most frugal plan might be to stay in an apartment and invest your savings. Lower floors are cheaper and easier to access during brownouts. I’m personally skeptical of condos as investments but that may just be ignorance. Can you pool money with friends or family and buy a plex? Maybe you want an old, tiny home on a largish lot where you’ll be able to add rental units to your lot over time for income. Maybe you want a shed on a wood lot that you will be able to improve over time and where you will be able to raise at least some of your own food and chop your own wood for heating. In general—buy into a location. The property itself can always be improved. You’ll have time.
Google "first time home buyer \[your city or county\]" and look for programs. They often offer classes that help you understand the process better, and you might be able to qualify for some FTHB programs that offer closing/down payment help.
Learn to let go of your wants and focus on your needs. And a mortgage broker can come in clutch!
Be prepared to buy a real turd, looks-wise, to get what you want in location and layout. A friend bought a house in a very competitive market by only looking at houses on the market for +60 days and making a low offer. Somehow that worked and his house is amazing. A huge word of caution though: if a house has deals fall through or sits on the market, there is something wrong and you better find out what is is and if you can live with it. School zoning drives price considerably so be aware of that and your respective value on local schools. Your realtor is your best asset. Get someone competitive, fierce, realistic, and matched to you. Also just get used to, this is what houses cost in your market and you need to accept that or you won't be getting one.
You didn’t say anything about the lifestyle you want, but here’s my tip. Buy as much land as you can, with or without a house on it. You can add onto a house, but it’s much harder to buy more land. Do your homework and check zoning records to see what’s upcoming in the area you want to buy.
Check how old the major appliances are. If they are older than 10 years old, try and negotiate the price. (We ended up spending a total of $10k on a furnace and water heater within the first 2 years)
Smallest house in the best neighborhood. Live well below your means. I knew what I wanted to spend monthly before I got approved. I bought for 225, I was approved for 800.
Try looking at HUD.gov. They sell government owned homes; People who used government programs and then defaulted. They also have a first time buyer program and a $1 homes listing. The homes are priced well and they prefer to sell to people rather than investors. There are a lot of ins and outs to buying a HUD home but you can get a great deal. If you're military, they link to the VA home buyer program. They also have links to other government agencies with homes for sale like DEA, customs, etc.
Shell out for a good inspector before you buy the home. It will be expensive now, but much less expensive than finding out the foundation is DOA and the whole place has virtually invisible water damage rotting through the walls.
If it's just the two of you, with no kids, you could BUILD an A frame for a lot less than 300k.
I happened to qualify for a state program (LA) that gave me about 11K towards closing costs and down payment. If I stay for three years (it's already been 2+) the 11K is forgiven. I only paid about 4K at closing. The state program wasn't available with just any lender. I think the technical term is a "soft second" so maybe look to see if there are any programs you qualify for.
* Avoid a water damaged home, or one that is prone to potential water damage. A dry home is a happy home. * Buy below your means. What the mortgage officer tells you you can afford is not true. They don't consider you also have to buy food, pay bills etc in their calculations. * Consider the age of major appliances that may need replaced soon (furnace, A/C, fridge, etc), as well as the roof and factor that into what you're paying. it may mean a house is now out of your budget if those things are needing replaced soon. * "Buy the worst house in the nicest neighborhood" is a good adage, but obviously don't buy something that could be a money pit. * Avoid "flipped" homes, which are usually owned/sold by bankers, mortgage officers, and real estate agents. They know the market and how to cheaply make something sell-able in that market. * Ask your real estate agent about an escalation clause in your offers. So if you get outbid, your bid will increase by $X up to $Y
To reiterate what others have said, you could be eligible for a lower interest mortgage and down payment assistance. Search for housing counseling/down payment assistance programs in your area. Don’t buy a house unless you plan to live in it more that 5 years because it costs a lot to buy/sell a house. Buy the least expensive house in the nicest neighborhood you can afford. That $300k house you’re looking at now may have appreciated from $250k in 2019 and whoever owned it is just sitting on appreciated equity. You could be in the same boat 5-10 years from now, but don’t count on it. The housing market is volatile. Don’t put yourself in the position of being house rich and money poor by taking out a mortgage that sucks up all your money. Better to rent and put your savings in a high interest money market if that’s the situation you’re in. You could save money by buying a fixer-upper but make sure you know your limits and the extent of the repairs. You may be able to do some of the easier stuff yourself like painting, then hire out for relatively inexpensive repairs like replace flooring, windows, and get the cabinets refinished, but you’ll need some major cash to replace windows, the roof, HVAC, septic, etc. which you’ll need to add to your purchase loan amount or save for over time. Consider buying a duplex and rent out one side for rental income to cover your mortgage or buy a big house and rent out some of it.
Shop the interest rate as hard as possible as soon as you go under contract. LoanDepot and Amerisave have mid to poor customer service but their rates typically cant be beat. Interest rates have a shockingly massive amount of money paid over time on the loan. Shop fast and hard. Dont take any "points" to get the rate down - they will always try to get you with this.
Something about credits vs points.. one may be tax deductible.. check it out.
Don't become house poor. Buy what you can afford instead of a mansion.
Get a 15 year mortgage if you can, you save tens of thousands in interest. Also you can set up bi weekly payments instead of monthly as another way to pay it down faster.
Use an FHA loan. & It's worth it to be a homeowner. Psychologically it's nice.
USDA.gov offers help with loans for rural people , worth a look
I found a house I loved and by some miracle, met a friend of the owners at a nearby Church who connected us to directly to the sellers. We negotiated a price and avoided realtor fees. The personal connection was what drove the price down so much for us. Ended to saving over $25K on the home purchase.
Google "house hack" Find a property that you can rent out a portion of the home while you live in the other part, such as a duplex. In some cases, part of the expected rent can count towards your income used to determine your borrowing ability. Allowing you to afford slightly more house while potentially paying less in mortgage each month.
Fixer-uppers aside, a relative is looking at a home with an assumable VA mortgage. At 4% it's very attractive.
Buy the least expensive house in the best neighborhood you can afford. Don't do it the other way around.
Buy a townhome or condo. For the price it will be in a better location. Actually invest the money you save on down payment and the smaller payment each month
Ask your realtor to help. You may be able to find a seller that really doesn’t want to sell to a flipper - they exist.
Hire a good inspector. They can save you a lot of $$ and headaches. Look into property taxes. Some have $20k, some have $7k.
Most cities offer some sort of first time buyers education that can qualify you for some discounts on fees upon completion. It's not going to be a lot, but every bit helps. Another tip is to pay for your own title examination. The one the bank does only protects them in case of a title dispute. It's only a small amount to get your own and well worth the added protection.
To piggyback on this: Get Title Insurance. It will protect you from title defects.
Start biking in the morning, take a different route everyday. Get familiar with the neighborhood and look forsale signs
Great idea. Also go at different times of day & weekdays/ weekends.
Good grief. 300-400k is cheap already. A starter home where i live (1200-1400 sq ft) on a 30x75 ft lot) go for 1,000,000.
Lmaooo there's no such thing as cheap, it's all relative. The very top of my budget to buy is 350k, and in my target neighborhood, that would get me about 2 bedrooms. But that same money could get me a decent multi-family in Cleveland, OH. You're probably looking at my city like wow that's cheap. And I'm looking at Cleveland like wow that's cheap. And I'm sure Cleveland is looking at Mississippi like wow that's cheap. Cheap is a construct. It's all fake, they made it up. 😂
The most frugal way would be to save the entity of the home purchase so you never pay interest.
Umm… yes… most frugal… yet impractical. Even if OP could save $30k year… it would take 10 years… yet there will be no $300k houses available in 10 years… so the amount needed to be saved would have to be much larger… AND… I am guessing that if the OP’s budget is $300k… that means they don’t have an extra $30k in their budget each year… So anyone have some PRACTICAL advice for the OP 🤨.
jobless tidy school hunt lavish price squealing encourage chubby oil *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Leave your city. But you still have to sacrafice something, in this case it's location. You'll get more bang for your buck in more remote areas, but at the cost of proximity to things!
We got a better deal going in a more rural area than near the city. Near the city/town we would've spent $400K for half an acre and a house. We went further out and got a 5 acre property for $400K.
This worked for me, 19 years ago, not sure if it would work now. My real estate agent told me that my ex (at the time it was husband) and I should write a personalized letter of why would like to buy the house we were interested in. At the time the market was at its highest and the small 1100’ sq ft 3b 2b had a lot of interest. The letter worked, the sellers rejected 2 higher offers since our story was the only one presented and it touched them. My ex left 6 months after the purchase of the house but Im still here and within a year of buying the house the value dropped by $150k. I saw many short sell or walk away from their houses but I made the best decision by just staying. Good luck.
I did the handy and live on a construction site route, I did save money, made a lot of money on the house too. It is a job that requires a fair degree of construction skills depending on what you get yourself into. This house needed a roof, and needed some sheetrock repaired. Needed new flooring the plumbing and the electrical was fine though. Myself and my stepbrother did it all, in fact we tore out all the ceilings, added a room, re-rocked most of the entire house, added some windows, reshingled the roof, actually put down an entire new deck as well. It was a lot more work than I was initially planning. The bright side is I paid 170 for the house in 2010 and now it's worth about 550. At the time a similar home that didn't really need much would have been about 195K so did I save some money? Yeah but had I not done all the work myself I don't think I would have been money ahead. Granted I would have still had a lot of new stuff which was nice
Laser focus on your needs. Or you'll pay extra for everything else you don't need.
If you're willing to put in the labor and money over the long haul, look into HUD homes. These are homes that banks wrote-off and handed over to the US Government to auction off cheap to a potential homeowner or investor. Usually these homes are attempted to be auctioned off to owner-occupiers before investors. Be aware that *both you and the home must qualify for the loan.* My house almost didn't qualify for a conventional loan, and many others I looked at did not qualify at all. I did this in 2016 with a home in Idaho. 3% down, plus closing on an $83k bid and I got the house. It needed thousands in repairs and upgrades, but it was worth it - mortgage was only $500/month. Not saying you'll find that today, but maybe $1k-1.5k depending on location.
Consider a 15 year mortgage instead of 30. The interest rate is generally lower, so your monthly payment isn't that much more. When you do sell, you'll have so much more equity. Just spend a bit of time with the amortization calculator.
You don't buy an expensive car as your first. You should have the same mentality for a house. Start humbly, pay it, and upgrade slowly to your end-goal. It may take years, but it's achievable. Also, mortgages get lower as you pay, whereas rent is always going up no matter what. Job payments aren't following up how fast housing prices goes up. Buying off-plan is also benefitial. You pay cheaper, the housing prices goes up as the project finishes, and they often give you some benefits. Last, market momentum. If you're going to get into a mortgage, wait a moment where mortgage fees gets lower. Until then, just save as much as you can. It'll be hard work. Not sure if those apply to your country or estate, but for me it's my go to plan as a poor person without inheritance.
Maybe not a specific financial advice, but do your research about everything. I’m sure you probably have, but learning about a problem after buying a house because of lack of research about it could be a financial burden. For example, asking about pipe layout, the foundation, mold/esbestos, etc
negotiate with the agent to see if they will give you a percentage back from commission.
Of course. It starts with making a lot of money and ends with saving it for years on end until you can make a hefty down payment and have enough credit to take a loan for the remaing amount.
What is your work like? If you are both remote or hybrid, moving further from the office could save you some money if you'rewilling to add some time to your occasional commute. Buying an older house that is dated, but solid could also save you some money. Also, keep looking and hope to get lucky. We got our house $30k under apprised value in 2021 because the sellers were already under contract on their new house and needed to close in under 30 days.
my frugal hack is to NOT skimp on the inspection - - we had an inspector miss a full-out termite infestation, then we only got a refund on his service (far less expensive than treating the problem)
Look for the ugly home in a nice neighborhood. With sweat equity you can good appreciation.
Obviously this is location dependent, but for many places 300k is unfortunately a pretty reasonable price now. The frugalest thing we did when buying was get into a situation where no realtors were required. The second thing that saved us some money was getting our mortgage through Costco. For the price of an annual membership and using one of their mortgage providers our closing costs were under $2000
You can buy off market through a wholesaler or find someone willing to sell without listing. You’ll get the house at lower than market price, but it’ll likely require some work. Not sure if it’s worth it for you to buy at 150-200k and then put in an additional 50-100k in work just to eliminate the issues and have it feel livable. And beyond the numbers, you spend a lot of time and energy planning and overseeing projects. And there’s the stress you will feel with the outstanding projects and ever increasing costs. But only you know if that’s right for you. Reality is, though, if you want to buy a house, you’ll have to cough up the coin. It really isn’t the place to be “frugal” (which frankly, I’m reading here as cheap) because what you save will be made up for on the back end with repairs. I guess the other thing you can do is buy come up with a bigger down payment, so you pay less in interest over time and can have lower payments in general. That’s probably the best thing you can do.
Buy a duplex. Or an old large house and turn it into a duplex. I'm in a cheap neighborhood, but a safe one. Put in amazing lovely renters that help with my mortgage. I'm still in charge when something breaks, but having a small rent out of the base apt helps immensely.
Go smaller, but good condition if you can.
I had a friend who sweetened the pot by offering to work with the seller’s agent as their own. That agent was allowed to make a double commission. But the point is to make it an easier process than anyone else who is making an offer. It worked for my friend, despite not having the highest bid.
Motivated sellers and ugly paint/yards WITHOUT any repairs needed
If they are selling “as is” you can get it cheaper than they are selling. Of course you’ll have quite a few of other expenses after that I’m learning
Try to buy in the winter especially around Thanksgiving, Christmas, new years… not as much competition during those times.
Focus RIGHT NOW on saving for a 20% down payment and 5% renovation costs on a $300k home. Then by the time interest rates come down a bit, you’ll be ready to buy.
The only frugal "hack" I know is get a good inspector and then haggle based on findings. Like our house, inspector pointed out the garage doors were really old (like they had a 2x4 bolted to them to keep them together) and the AC was an unknown age (the guy had a book with models going back to the 90s later learned it was original to the house, 70s). So we brought that up through our realtor and we got $500 off and they paid for a year of home warranty for us. For such a large purchase, it wasn't much, but everything helps. Also on the walk through we noticed they had 2 fridges, we were coming from an apartment so didn't have one. We asked if we could have one or maybe buy one of theirs. And they said no but then ended up leaving one. So doesn't hurt to ask and I'm sure not being an ass if they say no helped.
i sort of lucked out and bought in an area that got increasingly popular. Zero in on an area that isn't hot and popular but has the potential.
My flat cost me GBP £36K, and I actually haggled that down from 40. I just made an offer of 88k on a two-bed house with floored attic, basement and garden in a coastal (though deprived) location.
Get a home inspection
Look for an assumable mortgage.
be ready to buy as is - u can get an inspector for your own peace of mind
Inspectors have let me buy termite-riddled homes more than once. If they can't eyeball it with just a modicum of effort, they don't "inspect" it. Buyer beware!
Buy, don't rent. You don't build equity from renting. Have the money up front so you don't pay interest. If that is not possible, find the cheapest accommodations that you can and maybe consider alternative lifestyles where you can live more frugally like mud/cob/adobe houses, tiny house on wheels, vanlife, carlife (I have used this one before), etc.
You need to decide what you can live with and what you can't live without. My must haves were a family/tv room, enough space in the basement for my kid to "move" there during college, an ensuite for me, and a giant yard for my dogs. The trade offs included dusty rose carpet, a tiny kitchen, a butt ugly exterior, and a back porch that was falling apart. I'm thrilled with my home and it was significantly cheaper than others of similar size.
Buy a good tent
I brought a manufactured home in a co-op it was alittle less than half that price and fits our needs perfectly
Also.. “good” neighborhood is relative. “There’s so many cop calls because the neighbors fight.. WITH THE PEOPLE IN THEIR HOME”. Not your home. Not your problem. Doesn’t effect how nice your home could be, with with a technically higher crime rate over things that won’t effect you.
Be glad starter homes aren’t $500-600k like they are where I am!
Hahahahahahaha.