Buying Cheap Homes
Buying a house is an expensive investment. The more the house costs, the more you'll pay for:
- Closing Costs
- Realtor's Commission
- Home Maintenance
Even if you qualify for a more expensive home, you may want to consider one that's cheaper. The more you spend, the higher the realtor's commission is. For example, if you buy a home for $250,000 and the agent's commission is 6%, they'll earn $15,000 on the sale. If you're paying an interest rate of 3.375% on a 20-year mortgage, your payment will be $946 per month. When you add homeowner's insurance payments, general maintenance, and home repairs, you're spending a lot of money for the term of the mortgage, or as long as you retain ownership of the home.
Benefits of Buying A Cheaper Home
Whether you buy a home to live in or to retire to, there are a lot of benefits to buying cheap homes.
- Stop paying rent
- Low interest rates
If you're going to spend a portion of your income for housing every month, it makes sense to own the property, and sometimes owning can be cheaper than renting. The equity in your home gives you the full freedom to make home improvements. Home ownership provides security. You don't have to worry about it being sold or if the rent increases. You don't have to worry about a prying landlord when you own your property and have the freedom to make any changes you wish. When you buy cheap houses, you're making a sound investment.
Ways To Buy Cheap Houses
If you don't want to buy an expensive home or can't afford to, there are ways to buy a cheap home. The way a lot of people buy cheap homes is through foreclosures. There are several ways to buy a foreclosure:
- Buy the home from the bank
- Buy a home at a sheriff's or trustee's auction
- Buy a home from an online auction
- Buy HUD homes
If you want to eliminate the competition from other potential buyers, you may be able to purchase a home directly from the bank. However, many banks don't want to sell a home unless it's part of a parcel that includes several homes. Sometimes a bank wants to retain ownership as a tax advantage. Home auctions are listed in local newspapers. There are websites that list home auctions. If you're interested in buying a home at an auction, research the home to find out if there are delinquent taxes or overdue fees to a homeowner's association. These amounts must be paid at the time of the sale. Online auctions work differently.
Online Auction Process
Online auction houses have marketing specialists that hold the auctions in hotels around the country. Auctions are advertised online and in newspapers. At an online sale, you have the option of having a buyer's agent representing you. You may be able to inspect the house before the auction. It's important to set a limit on the amount you're willing to pay, so you don't pay more than the house is worth.
HUD Foreclosed Homes
Several websites offer information about HUD homes that are available through:
- Fannie Mae
- Short Sales
You can specify the state and even the neighborhood you want. Many homes are priced at half the current market prices, and many are priced starting at $10,000.
Top 5 Routes for "Cheap Houses"
- The Simple Dollar This website offers information on how to save money on home purchases, credit cards, education, insurance, and banking.
- Bank Rate Bankrate offers ways to manage finances and provides a handy mortgage calculator.
- Investopedia This well known website can assist in almost any financial matter, with this specific article helping set budgets for homes.
- The Balance This website explains how to buy a cheap foreclosure.
- HUD Foreclosed This site provides information about HUD listings across the country.