Personal Finance Tip of the Week, By Financial Fundamentals, LLC of Watertown

Home prices have been steadily increasing for the past few years, which has been welcome news for existing homeowners but an ever-growing obstacle for people looking to buy their first home.

Fortunately, people with modest incomes are still finding ways to make it happen. Here’s how some are doing it:

1. They have gotten themselves prepared financially. They have worked hard, sometimes for 2+ years, to build up the four pillars of homeownership: a higher income, credit score and savings, and lower debt. This allows them to put more down and to borrow more at a lower rate, enabling them to support a higher purchase price. (For more on the four pillars, view this picture.)

2. They take advantage of resources. Financial resources aren’t just available to the poor; some programs are open to families earning up to our area’s median income. An example is the One Mortgage, which is a high-quality, low-cost mortgage offered by a state agency called Massachusetts Housing Partnership. (for more on the One Mortgage, read this blog post.)

3. They are flexible. They don’t give up when they become priced out of a particular area. Instead, they broaden their horizons to new towns and neighborhoods. Yes, there are trade-offs, but you may discover that a new neighborhood can offer unique qualities and benefits, too.

4. They are determined. It’s not easy to buy a home in Massachusetts on a modest income. Setbacks, such as rejected offers and financing complications, are common. But successful homebuyers view these setbacks as temporary, and they maintain the drive to realize their dream.

Do you share their dream? If so, you can make it happen too, even in today’s housing market. It just takes preparation, resources, flexibility, and determination.

Thanks for reading! You can learn more on our web site and Facebook page.

Stephen Barkhuff, CFP(R), CFA, MBA is the founder and president of Financial Fundamentals, LLC, based in Watertown, MA. Financial Fundamentals helps couples and singles with modest incomes take control of their financial future. You can reach him at mailto:SBarkhuff@FFundamentals.com.