Can't Afford To Buy A First Home?

About 68 percent of Americans now own their own home. If you are renting or living with your parents and are dreaming about buying your own home, it’s time to wake up and figure out how you can make this happen for yourself.

First, you have to change your perception of what you can afford to buy. Most first-time buyers think they’ll be purchasing a home similar to the one their parents live in today. But when you’re buying for the first time, you have to think about what you can actually afford to spend and where you want to live. Here are three possibilities:

If you want to buy something, but can’t afford a single family home in your neighborhood of choice, your first option is to find a condominium or townhouse you like instead. Condos and townhomes are generally less expensive than a single family home. When your prospects improve, you may be able to keep it and rent it out, just be sure to read the rules and regs of the building first to make sure it allows rentals.

If you can’t afford to buy on your own, double your buying power by buying with friends or family. You can try to purchase a multi-family building. If you find a four or six flat building, you and your friends might live in two of the units and rent out the other two or four units. It’s cheaper to own because you’ll share the maintenance costs. And ultimately, you could hire an attorney and divide the units into condos to make reselling them easier. But when you buy with someone else, it’s extremely important to hire an attorney to write out a partnership agreement that spells out who does what and who pays for what before you buy.

Your third option is to buy a fixer-upper. You might look for a smaller house on a bigger lot, which would allow you to add on to it down the road as you have the cash. Or, look for an ugly house that needs plenty of TLC. You want the property to need cosmetic work, like repainting and recarpeting, rather than structural work like fixing a cracked foundation. The cheapest way to go is to redo it slowly, over time. And when you do fix it up, remember that neutral tones sell best.

Getting the right mortgage can help you buy that first home as well. Fixing your credit and finding a lender who can help get you preapproved for your loan.

For more information go to www.bankrate.com for information on loans and lenders or myFICO.com for information on credit scores and to purchase a copy of your credit history and credit score.