5 Ways To Boost Your Home Buying Power

A Prepared Buyer is a Competitive Buyer

5 Ways to Boost your
Home Buying Power

In the current market where rates and home prices are high, future home buyers are wondering if they will ever be able to purchase a home of their own. One common theme I’ve observed among successful buyers is their ability to maximize their home buying power. Your home buying power determines the type of home you can afford and the mortgage terms available to you. I am sharing five effective strategies to boost your home buying power and make your dream of owning a home a reality.

1. Improve Your Credit Score

Your credit score is a crucial factor in determining your eligibility for a mortgage and the interest rate you’ll receive. A higher credit score typically translates to lower interest rates, which can save you thousands of dollars over the life of your loan. To improve your credit score:

2. Save for a Larger Down Payment

A larger down payment not only reduces your monthly mortgage payments but also demonstrates your financial stability to lenders. A 20% down payment is often seen as ideal, as it can help you avoid private mortgage insurance (PMI) and secure more favorable loan terms. Saving diligently for a substantial down payment shows commitment and financial responsibility. With that being said, it is possible to purchase a home with less than 20% down, there are great loan programs that allow 3.5% or 5% down. Here are some simple ways to save each month:

  1. If you haven’t, create a monthly household budget to help identify where you can cut back. So many time we nickel and dime ourselves on quickie-mart trips, amazon purchases, or eating out. 
  2. Automate Savings by setting up automatic transfer to a dedicated savings account on the days you receive your paycheck. This ensures you are consistently saving each month
  3. Cancel Unused Subscriptions and then apply the cost of those to your savings each month
  4. Limit Dining Out or Your Coffee Order… so much money can go towards eating out or that $7 Starbucks order. Try to only eat out for special occasions and take down your daily coffee to a end of the week treat. 
  5. We live in a very materialistic culture. We all have items sitting around our homes that go unused. Sell unwanted items through a garage sale, online marketplaces, or consignment shops
  6. Seek additional income that goes straight to your down payment funds. Do not add this income to your typical checking account. This could be part time work, a freelance gig, or side hustle. 
  7. Track your progress regularly, as you see your savings grow you’ll be incentivized to keep going!

3. Increase your Income

A higher income can significantly impact your home buying power. Consider ways to boost your income, such as:

  • Seeking a salary increase or promotion at your current job.
  • Exploring side hustles or freelance work.
  • Investing in skills or education that can lead to higher-paying opportunities.

A higher income can help you qualify for a larger mortgage and afford a more desirable home. 

4. Explore Down Payment Assistance Programs and Grants

Many local and national programs offer down payment assistance to eligible homebuyers. These programs can provide grants, loans, or tax incentives to help cover your down payment and closing costs. Eligibility requirements vary, but they often consider factors like income, location, and property type. For those looking in Oklahoma, many lenders offer their own programs but the Oklahoma Housing Finance Agency is the state agency for Down Payment Assistance programs. These programs are offered for first-time and repeat buyers AND can be used on new construction as well as existing homes. The purchase price and income limits vary based on their products. To research and learn more on their programs you can speak to a OHFA Certified Blue Ribbon Realtor (me!) or OHFA Lending Partner to get more information.

5. Negotiate a Seller Credit to Buy Down the Mortgage Interest Rate or Utilize for Closing Costs

When negotiating the purchase of a home, don’t overlook the possibility of asking the seller to contribute toward your closing costs or buy down your mortgage interest rate. This can reduce your upfront expenses and lower your monthly payments. While not all sellers will agree to this, it’s worth exploring, especially in a buyer’s market or when dealing with a motivated seller.

Boosting your home buying power is essential to securing your dream home while ensuring favorable mortgage terms. By utilizing one more or more of these strategies you can enhance your financial position and achieve your homeownership goals. Remember that each individual’s financial situation is unique, so it’s important to consult with your agent and a local mortgage lender to create a tailored strategy for your specific needs and circumstances. Happy house hunting!

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