It’s no secret that buying a home is a big investment. But it’s also possibly the biggest wealth building tool that you’ll ever encounter in your entire life. Why is this? For many reasons. On one hand, homes tend to increase in value: 4-5% most years. You’ll also not lose any of the money that you put into your mortgage payment (unless your home happens to lose value). This is an enormous reality for homeowners. Just think of all the checks you wrote for landlords. It’s almost like throwing that money down the toilet. Finally, homeownership is essentially subsidized by the federal government. As a homeowner, you’re able to write your mortgage payment interest off on your yearly taxes. You’re also paying an artificially low interest rate, one meant to attract homebuyers. In short, home buying is no-brainer for would-be wealthy people.
But it’s not a step that everyone is able to take. If you don’t have the credit history or resources to pay a down payment, you’re out of luck. It doesn’t matter if you are able and responsible to pay the mortgage payment in full, on time, every month. If you aren’t able to get a bank or other lending institution to foot the bill to pay for the house all at once (that’s what a mortgage is, folks), then you won’t be able to buy the house, no if’s, and’s, or but’s.
So many would-be homeowners are left standing on the stoop. This is especially a problem in metropolitan areas, where many first time homebuyers live near or below the poverty line, amidst houses which cost many times what they would be able to afford. Because home ownership is a leg up into a new lifestyle and privilege class, it’s essential for people who don’t want to remain in the economic strata in which they find themselves. But how do you afford that down payment?
Well, banks are looking for a few things when they give you a mortgage loan. One, they want you to be employed. If you haven’t been working a single job for two years or more, it may be tough to get someone to give you the money for the whole thing. You’ll also want steady credit history. If you don’t have a good credit score, take a year or two to work on that. Work on your credit to debt ratio, pay your bills on time, and basically be a goody-two-shoes when it comes to paying for things in full and on time.
But then you’ve got to have the money for that down payment. If you live in a metropolitan area, I recommend looking for financial programs which help first time homebuyers get a leg up. There are also investment opportunities which pay off fast for reasonable sums like down payments. FX trading with CMC markets is one such investment. Users are able to see quick returns (and losses, be careful) on the outcomes of investments made regarding the future values of currencies. These investments resolve quickly, but reward practice, insight on world affairs, and a knack for the rhythms of FX trading. So try saving and investing for your future down payment. If you’re building up your finances in the rest of your life simultaneously, you’ll have no problem buying your first house when you’re ready.