There will come a time in your life when you start to wonder about the future. You might ask yourself questions about where you’re going to be living, how much you’re earning in your career, or if you’re going to have a family in the next few years or decades.
When you finally snap out of your daydream, you might begin thinking about how close your imaginations are to reality. For instance, you can ask yourself if you can afford to buy a house instead of renting with the amount you’re currently earning. Besides, living wages can only be adequate for so much until it becomes insufficient.
But you should know that homeownership is not a ruse that can get you into trouble, or at least, not intentionally. Instead, it’s a big responsibility that you’re putting on yourself so that you can achieve a certain quality of life. Being a homeowner can be your potential end goal as an adult who’s trying to navigate their way through life.
So you shouldn’t let money get in the way of you trying to achieve your goals, especially if you can do something about it. Below are some pros and cons of being a homeowner or a tenant, options you have to afford to buy a house, and additional income sources.
Buying vs. Renting: What’s More Practical?
When it comes to having a place to live in, both buying and renting a house can solve the problem. Their main difference is that when you buy a home, you’re in charge of everything from paying your bills to the maintenance of utilities. When you rent, your landlord usually handles that maintenance aspect.
You can’t also guarantee that the amount you’re paying now as a tenant will be the same amount that you will have to pay in 10 years. But if you own a house with a fixed-rate home loan, you can guarantee that the amount you’re paying for will remain the same throughout.
Plus, there’s the bonus that you can get to build home equity over time. Think about it. If you’re currently renting a place, it means that you’re paying for someone else’s property. So why not take the money you’re putting aside for your rent to pay for a property that will eventually become yours?
There are several upfront costs when you buy a house compared to when you rent, but consider the money you’re going to save in the long run. You can finance the buying by taking advantage of low-interest rates offered by the Federal Housing Administration (FHA) for low-to-moderate-income borrowers instead of going after conventional programs offered by banks.
If you still don’t think that you can afford a house because of the down payment and closing costs, you can also look into first-time homebuyer programs that FHA offers. These can help you shoulder the costs through grants, zero-interest loans, or deferred payment loans.
How Can You Afford It?
When you’re earning a living wage, your budget can often be tight. You might think that buying a house is impractical because you’re barely making ends meet, let alone afford to buy an entire house. While you have solid points and can make a good argument, you should still try to see the bigger picture.
Homeownership can be more beneficial in the long run, especially if you’re planning to stay in one place for a long time. The costs of buying a house may come back to mind, in which case you can do one of two things: reduce your expenses or increase your income streams.
While the first option is self-explanatory, the second begs to be delved into. You see, it’s no longer uncommon to juggle multiple jobs at the same time. In fact, it’s recommended to have at least two or more income streams while you’re still young so that you can maintain a certain quality of life.
Of course, that doesn’t mean that you should have two full-time jobs as that is physically and legally impossible. Income streams aren’t limited to full-time employment opportunities; you can explore part-time work, freelancing, gigs, or even starting a business that won’t take up too much of your time.
The point is that if you can’t significantly reduce your expenses, the smart thing will be to increase your passive income sources. Having multiple income streams can also assure financial stability because when one stream dries up, you’ll have others that continue to flow.
Buying a house on your living wage can seem too difficult, but not impossible, as long as you can carry the load of the additional responsibility. At the end of the day, the important thing is that you’re working toward goals that will benefit you and your future, not other people.