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How to Budget and Free Up More Cash For Your New Home

By Ron Darby


If you've been renting for a long time, you may be so comfortable, you've given up on the thought of home ownership. But before you write off the option of home ownership, be sure to compare your rent versus mortgage payments on an after-tax basis. After comparing these two options, if the mortgage payment still appears too high, don't just throw in the towel. There are several creative options to overcome what seems like a monstrous monthly payment.

One way to qualify for a property in an upscale neighborhood is to search for potential roommates who will rent from you. With the right situation, the income received from your roommates could reduce up to half of your monthly loan payment and utilities. After taking into consideration all tax deductions and profit from equity, you have a good opportunity to make a profit. When the loan is paid in full, you benefit by owning real estate free and clear of any lien or encumbrance. Renters from all circumstances, single or married, have taken strategic steps and opportunities to make their dream of home ownership a reality. Let's explore some other avenues:

1) Construct a guest unit you can rent out for income.

2) Reduce your monthly loan payment by switching to a low adjustable rate loan. In light of the recent melt down in the mortgage business, you should consult with an experienced mortgage agent or real estate lawyer prior to locking yourself into this type of loan.

3) Cut your monthly loan commitment by applying for a graduated payment mortgage.

4) Use a balloon mortgage to lower your payments.

5) Research the option of buying a duplex, triplex, or other property that provides monthly income to help offset your monthly mortgage expenses.

6) Inquire with a local mortgage agent to see if a mortgage credit certificate program (MCC) exists in your area. Under this program, the government offers you mortgage aid up to $2000 each year.

7) Add a part time job to bring additional income to supplement your payments.

8) Ask your boss for a raise or housing aid.

9) Explore the option of buying a property together with a family member or close friend.

10) Look into an interest rate by down.

11) Look into the option of assuming a low interest FHA or VA loan.

12) Acquire a low-equity rate buy down.

By implementing these techniques, you can effectively reduce your monthly loan expenses and free up more cash. If you have a goal to purchase a home in a nice neighborhood, you'll need to re-evaluate your monthly budget to squeeze as much savings as possible.

One exercise to help you prioritize your budget is to write down all your regular monthly expenses to see where you spend the majority of your income. Although most renters long to own a property, they expend the majority of their monthly income towards non-appreciating costs such as the latest automobiles, hi-definition TV's, and concerts. By simply spending time re-evaluating your monthly budget and cutting out unnecessary expenses, you'll increase the odds of buying a house sooner.




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