56% of Home Buyers Are Getting a Side Hustle to Buy a Home. Should You?
- These days, home prices are through the roof and borrowing rates are up.
- Given those high costs, you may need to consider a second job to make homeownership more feasible.
It may be a route worth exploring.
To say that it's difficult to buy a home in today's market would be an understatement. The reality is that home prices are sky-high, and they aren't poised to drop to more moderate levels anytime soon.
Making matters worse is that mortgage rates have been rising sharply, due in part to rate hikes on behalf of the Federal Reserve. Last year, it was possible to sign a 30-year mortgage at around 3%. These days, the average 30-year mortgage has been hovering around 6% at a time when buyers can't afford to spend more on interest.
If you've been struggling to purchase a home due to the high costs involved, a side hustle could be your ticket to finally getting to buy. In fact, 56% of those interested in purchasing a home are getting a second job to make that possible, according to Bank of America’s 2022 Homebuyer Insights Report. And if you're willing and able to put in the time, you might benefit in more ways than one.
More cash to put down on a home
Coming up with a down payment on a home is even more difficult these days given soaring property values. A good way to boost your down payment funds is to take on a second job.
Even if you have enough for a down payment saved up already, if you're nervous about keeping up with your housing costs once you sign a mortgage, a side job could make it easier to manage your expenses.
Remember, when you buy a home, you can sometimes get hit with costly repairs you weren't expecting early on. But if you hold down a side hustle, you'll have more money to cover such repairs, thereby potentially avoiding debt.
An easier time qualifying for a mortgage
Another important number lenders assess is your debt-to-income ratio. That measures the amount of existing debt you have relative to your income.
Finally, lenders look at your income itself. They want to make sure you earn enough to keep up with your mortgage payments.
Getting a side hustle could help in all regards. If you have a lot of credit card debt, it could result in a lower credit score, which presents you as a more risky borrower. But if you boost your income with a second job, you might manage to pay off some of that debt and raise your credit score in the process.
Once you have less debt, not only might your credit score improve, but your debt-to-income ratio could also shrink. That might make a lender feel better about your ability to manage your mortgage payments.
Finally, a consistent side hustle is income your lender might count when determining whether you can afford a mortgage. And if your regular salary is just shy of what you need to qualify for a mortgage, a second job could bump you over that threshold.
It pays to consider a side hustle
Working a second gig could make it possible to buy a home. It could also make that home easier to afford on an ongoing basis. It pays to explore your options for taking on a side hustle. Thankfully, there are many flexible gigs you can look at that allow you to earn a decent amount of money without forcing you into a schedule that leaves you feeling stressed.
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