Buying a home has become more challenging this year than it was a couple of years ago, with rising interest rates even as home prices remain high. This market has some hopeful home buyers discouraged, wondering whether reaching their real estate goals in 2023 is still realistic.
While you may need to make some changes to your initial plan, we have some tips that can help you overcome affordability challenges and move forward with your goal to buy real estate in 2023.
1. Be open minded
The key to overcoming affordability challenges in the market is remaining open minded. This might mean being open to a different type of property or neighborhood than you originally considered, or a willingness to have a flexible timeline. Being open to asking for creative financing solutions or considering different ways you can leverage your property to offset the expense is key.
2. Widen your search area
While the location of your home is one of the most important things about it, you may want to consider widening your search area if you are having trouble finding properties in your price range in the desired neighborhood.
By opening up your search to just 5 or 10 minutes away, you may find that there are many more properties that fit your budget and criteria.
3. Get creative with financing
It’s no secret that mortgage interest rates are up and this is making it more difficult to afford the home you were planning to buy. However, mortgage lenders are more motivated than ever to make home ownership accessible, and are offering incentives and creative solutions to help you meet your goals.
As you apply for pre-approval from multiple lenders, ask them about what they can offer for temporary interest rate reductions, down payment assistance, lower closing costs, and more. You may be surprised to find there are more opportunities available than you expected. You won’t know unless you ask!
4. Consider house hacking
House hacking is a great way to drastically offset the cost of homeownership. Consider purchasing a duplex or other multi-family home and living in one of the units. In many cases, the revenue from renting out the other unit(s) will cover the monthly mortgage payment.
5. Look into short term rentals
If you are looking for a way to purchase a second home, like a vacation home or somewhere to retire in the future, consider starting with a short term vacation rental. This can open up new financing options, and can even become a stream of income. You can transition the property into one for personal use in the future, or enjoy it as your personal vacation home for short periods of time throughout the year and allow the revenue from short term vacation guests to cover the expense.