What’s the Cheapest Way to Buy a House?
It’s cheaper to buy than rent, but saving for a house isn’t exactly easy. Then you factor in the cost of interest and the encouraging noises you were once making about home ownership start to sound muffled and even a little alarmed.
Fortunately, you don’t need to follow the path most commonly traveled: the dream house and the conventional mortgage. Home ownership is important to the economy and the government, so there is a whole list of ways to buy a cheaper house or to save money on mortgage costs.
Looking for the cheapest way to buy a house? Check out our full guide here.
The Cheapest Way to Buy a House: 5 Techniques
We’ve put together a list of five hacks to buy a cheap house by saving on the principal or scoring extra perks like low-interest rates, discounts, or savings on fees.
1. Buy a Foreclosure
Buying foreclosures are often the go-to for those looking for the cheapest way to buy a house or find a property to flip.
Purchasing a foreclosure was the way to go ten years ago when banks were trying to off-load more houses than they could handle. But even then, banks weren’t selling for pennies on the dollar, and they still aren’t.
Foreclosures are typically available for less than the balance especially if the property market in that area has declined significantly. But you won’t make out like a bandit nor will you find heavily discounted properties on the MLS.
If you want a really cheap property, head out to sheriff’s auctions, which are advertised in the local paper. Buying at auction requires a cash payment, but you’ll avoid the fees associated with a mortgage, especially interest.
2. Find a Short Sale
If you’re not interested in the strings that come with auction properties, you might consider a short sale.
A short sale property is a property in foreclosure. In the case of the sale, the house is listed below its value or the value of the mortgage in an attempt to attract more buyers and offload the house at a decent price quickly.
Despite its name, short sales aren’t always over quickly. In many cases, houses are listed so low that the bank either wouldn’t accept the deal or takes several months to a year to agree to the sale.
It’s hard to know what a bank is willing to accept for a property because the bank wants to maximize the sale – it’s already losing money. However, those rare property unicorns, pre-approved short sales, are one way to identify the lowest price. In a pre-approved short sale, the bank accepted an offer, but the buyer walked away at the last minute.
There are deals to be had and those who find them have found the cheapest way to buy a house. Once the bank is handed the title at the end of a foreclosure, the property could go for even less cash than a short sale. The key is for the bank to recognize when this is a possibility.
3. Get a Grant
Are you a first-time home buyer? Do you qualify as low income? You could get help with buying a house through a grant or low-interest loan scheme.
If you’re not fussed about a specific property, these grants could help you get into a new home faster:
Federal Housing Administration loans are often income-based and provide a way for new buyers to get into homes without a conventional mortgage. The FHA offers loans with favorable terms so you can save on interest and fees.
The U.S. Department of Agriculture offers both loans and grants to those who fall within the income requirements for their region. The homebuyer assistance program provides fixed loan payments, so you don’t need to worry about your house becoming more expensive than you signed up for.
Good Neighbor Next Door
The Department of Housing and Urban Development (HUD) offers the Good Neighbor Next Door program offers discounts of up to 50 percent on the listed price of a home in a “revitalization area.”
Only those in certain professions qualify: firefighters, teachers, law enforcement officers, and EMTs are invited to apply.
The U.S. Department of Veterans Affairs (VA) offers service members, both active and veterans, the chance to buy a home without the hoops.
These loans make for cheaper homes because the interest rates are competitive and there’s no private mortgage insurance required. There’s also no minimum credit score or down payment required.
Your state and city may offer its own grants and home buyer programs to help locals buy cheaper homes. Ask a real estate agent at Jeeves Realty or your local HUD-approved housing counseling agency to learn more.
4. Buy Urban
Be like the pioneers of the past and move into an urban neighborhood that is, as they say, “up and coming.”
Up and coming is a strange modifier. It’s used to refer to recently gentrified neighborhoods, but some also use it to describe up and coming adjacent communities – the ones that have “potential.”
Buying in these neighborhoods or zip codes often means scoring lower property prices for the cost of living within driving distance to areas with more amenities.
Check with your state or municipal government to learn about additional grants or loan options available to buyers moving into revitalization areas.
5. Buy Rural
Rural properties aren’t just a place to retire. They’re also far cheaper than suburban properties and often include both significantly larger properties and land. Buying rural has several advantages. Your property price isn’t likely to fluctuate significantly, meaning you won’t find yourself in an upside-down mortgage.
Plus, you could get help from the USDA, which has programs to encourage people to buy properties and live in rural areas across the United States.
Don’t forget, you’ll also save on extras like homeowner’s association fees and property taxes.
Save Money for Tomorrow With a Cheap Property
Whether you’re a first-time home buyer or you’re hoping for a blank canvas to make your own, using these methods for the cheapest way to buy house saves you money today and allows you to dream for tomorrow.
From the principle to mortgage insurance and interest, there are plenty of ways to save. You just need to be creative and even be willing to experience something new.
Did you find a property at a steal? Share your stories in the comments below.