The big city life attracts many. But the cost to live in a major U.S. city can be quite pricey.
Home prices in major cities have been rising steadily over the past few years. In some major cities, homes are more expensive today than they have ever been. However, getting a home in the city for an affordable price can be trickier.
Fortunately for home buyers looking in the city, there are ways to keep the cost of your home, and mortgage, down.
Affordable homes start with low mortgage rates. Rates are currently near their lowest level in years, and low rates means less expensive housing.f you have your heart set on buying a home, condo or townhouse in a big city, there are ways to save money so you can actually buy a dwelling you love while saving money and without changing your lifestyle.
- Get help through a nonprofit. For example,the HomeSight Neighborworks® HomeOwnership Center serves Seattle and counties around it, helping create affordable homeownership opportunities for first-time buyers. Other major cities have similar organizations.
- Find a government home. There’s a chance you can find a low-cost foreclosed home on the HUD list. Some might be fixer uppers, but you could find a gem at a great price.
- Get rid of your wheels. Many cities have excellent public transportation, meaning you can sell your vehicle to generate some extra spending money. Also, you’ll be able to cancel any payments you’re making on your vehicle. This can go a long way in the mortgage application process, and it could lead to a lower required downpayment and even lower rates.
- Find nearby neighborhoods outside the downtown. Even if you desire to live close to the action of your beloved big city, you might have to move a little outside of the city to a charming neighborhood that has less expensive housing prices. Homes in these areas could even be USDA loan eligible, a program that required no downpayment. A USDA loan could help cut the costs.
- Get a tiny house. Tiny apartments and homes are now on the rise. For instance, more than 60,000 people are fighting to purchase space in a new development opening this year in Kips Bay, N.Y., that offer 55 units between 265 and 360 square feet each. Renters will pay between $1,500 and $3,150 a month, well below the average price for an apartment in the area
- Save more money than you need. It might sound harder than it really is. But if you start to save just 10 to 20 percent of your paycheck each month, it might not take long to have enough money for a larger downpayment. These savings will give you more options when it comes to choosing a home while potentially saving you from paying for mortgage insurance and making you a more attractive home buyer to lenders.
- Choose less expensive home insurance. Your lender will have minimum requirements for your homeowners insurance. However, you can shop for your own insurer and pick whichever one meets the requirements. By inquiring many companies, you can find the right policy for the right place.
- Rent a room. Having renters in an extra room, in your basement or in your converted garage can definitely cut your costs. However, before committing to this cost-cutter, check with your local authorities about rules and regulations.
- Earn money sharing your home with travelers. With the popularity of apps and websites such as Airbnb or VRBO (Vacation Rental by Owner), you can make some extra cash after buying your new home by renting it out for a few days while you are gone. Also, if you have an extra open space, you can offer your home to vacationers while you go about your regular routines.
- Do chores during your work breaks. Instead of going out to eat during your lunch, save money and time by doing your errands then.
Home buying in the city isn’t an unachievable dream. Once you have a home, most of your needs will be within walking distance of you. This minimizes the costs of travel and commuting you may be used to. Also, homes in the city retain their value better than other homes, and they can appreciate in value at a quicker pace.
With current mortgage rates near historic lows, now could be the right time to move into the city.