How to swing homeownership in today's market
Given that home prices are elevated on a national scale and mortgage rates are far from cheap, you may find it difficult to afford a home on a modest salary. But there may be ways to swing one.
First, you could consider buying a home and renting a portion of it out. This works especially well if your home features a separate entrance, finished basement or garage for privacy. You could also look at buying a duplex, which has two separate units under one roof.
You can also partner with a real estate agent who knows your local market well and try to find neighborhoods that are less expensive. In fact, moving into an up-and-coming neighborhood could allow for big savings on a home purchase. And while you may be giving up certain amenities in the near term, once that neighborhood is developed, you could gain access to many perks — not to mention see your home value soar.
You can also see if there are any first-time home buyer programs in your area. Minnesota has a Start Up program for first-time buyers with income limits of up to $142,800 based on county. With a $50,000 income, you may qualify for down payment and closing cost assistance, so it pays to learn more.
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Learn MoreMake sure you don't get in over your head
Even if you're technically able to buy a home, you don't want to end up in a situation where you're stretched too thin. As mentioned earlier, it's best to keep your housing costs to 30% of your income or less. It could pay to wait until you've saved up a larger down payment to move forward with a home purchase.
You should also make sure to have a solid emergency fund before making a home purchase — ideally, one with enough money to cover at least three months of essential bills. Once you become a homeowner, your ability to save might dwindle. So it's important to go in with a nice cushion.
Meanwhile, once you buy your home, make sure to put yourself on a budget so you're able to keep up with your expenses. You also want to make sure you're still able to save some amount of money on a regular basis, since your retirement probably isn't going to fund itself.
And speaking of retirement, make sure that buying a home doesn't mess up your long-term financial goals. If you take on a house that eats up a lot of your paycheck, it might limit your ability to save for retirement.
Granted, at age 40, you have many more working years ahead of you. But you also don't want to neglect your retirement nest egg for the next decade and a bit due to buying a home. Make sure you'll be able to strike that balance before moving forward.
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