June is National Home Ownership Month—a time to celebrate the value of homeownership to families and communities. Yet, it’s a dream under pressure. Today’s homeownership rate is 66%, down from the 67.9% rate during the summer of 2020 and well below the pre-2008 Credit Crisis peak.¹

Affording a new home has become more difficult for four basic reasons: higher mortgage rates, higher home prices, lower inventory and lagging wage growth.

There are ways, however, you can make homeownership a reality.

1. Save for a bigger down payment. A larger down payment reduces the monthly mortgage payment by having to borrow less and by potentially obtaining a more favorable interest rate on your mortgage.
2. Consider an adjustable-rate mortgage. An adjustable-rate mortgage usually offers a lower rate than a 15- or 30-year fixed-rate mortgage, translating into lower monthly payments. The major risk is that mortgage rates will be higher when the interest rate gets reset.
3. Adjust your expectations. Recalibrate your expectations about the home you wish to buy, your preferred location and even the timing of a home purchase. Expand your search to different locations where housing may be cheaper or have lower property taxes.
4. Shop around for a mortgage. Obtain mortgage quotes from multiple lenders or work with a mortgage broker who may offer a wider choice of mortgage products and rates.
5. Work on your credit score. A good credit score may translate into obtaining a mortgage at a better rate. Check your credit score and look for errors and problems that may be dragging it down.
6. Undertake a comprehensive personal financial review. Rein in your spending and retire high-cost debt to free up cash flow that can be directed to monthly mortgage payments.
7. Lock in a mortgage rate. If you believe rates may rise during the home search process, speak with your lender or mortgage broker about how to lock in a mortgage rate.
8. Buy a fixer upper. Homes that need upgrading will come at a lower price and, therefore, a lower mortgage payment. This option provides you with the flexibility to invest in home improvements over time as your budget allows.
9. Wait for the slow season. Start your house hunting during the slower months, usually November to mid-March. There may be fewer listings from which to choose, but you may find more motivated sellers.
10. Increase your income. Discover ways to increase your income by asking for a raise, finding a new, higher paying job, or starting a side hustle.

Source:

1. https://tradingeconomics.com/united-states/home-ownership-rate

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