More Renters Prepared To Make Sacrifices For Homeownership

There’s no denying that home prices are currently the most affordable they have been in years. And while there is an uptick in Americans delaying homeownership, a new study reveals that 80% of renters are willing to make financial sacrifices to achieve their homeownership goals.

Half of the renters surveyed said they would cut back on dining out, 49 percent said they would cut back on shopping for non-essential items such as clothing and accessories and 47 percent said they would give up luxuries like cable packages and trips to the salon in order to purchase their dream home. Ten percent would even reduce their contributions to a 401(k) in order to put money toward a home. (source)

This survey lets us know just how eager renters are to achieve their homeownership dream given the right set of circumstances. But two of the biggest obstacles keeping renters away from the real estate market is 1) lack of savings for a down payment and 2) job instability or low-pay. Below are a few things renters can do to alleviate these barriers and make sure their sacrifices will be enough to realize their dreams:

1. Look for better paying jobs or take on side work. Lenders are searching for borrowers who have a strong income and a stable work history. You’ll need to show two years of consistent income (preferably from the same job) to qualify for a home mortgage. If you find that your current job doesn’t pay enough, now is the time to switch gears and find something better.
2. Use extra income to pay off debts.  A low debt to income ratio will help you qualify for mortgages with better interest rates. Lenders want to know that you have enough wiggle room financially and that you won’t be swamp by your other debts in times of crisis.
3. Save a significant amount of cash now.  Credit markets are still tight, so prepare to make a down payment of at least 10 percent.  In some cases, lenders may require 20 percent depending on your credit history and whether or not you can take advantage of first-time homebuyer programs. A significant cash cushion will also make it possible for you to pay for the little expenses that come with owning a home such as repairs, improvements and the initial cost of moving, hiring the moving services miami and buying major appliances.
4. Make financial planning a family affair. If you’re married, you will need to coordinate your financial strategy with your spouse. Lenders will examine the financial health of both you and your partner when you apply for a mortgage, so be prepared.