We are all looking for tips about how to earn money. With the rising cost of living in the US, a lot of Americans are forced to hold two jobs just so they can make ends meet. Some of us are desperate enough to try to earn from home even as we juggle the time and effort we spend working in our day jobs.
While there are a lot of work from home options that will help you earn more money, did you know that you can actually earn from your house? We mean you can use your house to help you generate more income. There may be consumers who are aware of this but they usually don’t know how to go about it.
This idea, earning from your house is actually something that could encourage people to buy their own homes. Sometimes, potential home buyers are discouraged from the purchase because they only think about the high cost of buying their own house. Even if they factor in the equity that will grow with every mortgage payment, they are turned off by the fact that they have to pay a huge amount of money.
According to the data from Census.gov, this year marked the lowest homeownership rate in the country since 1967. The current rate in 2015 is 63.4% – 1.3% lower than the equivalent period in 2014 (64.7%) and 0.3% lower than the last quarter of the same year. Even if the average sales price for homes is at $156,300, not everyone is ready to buy their own property.
Most consumers are probably concentrating on how to earn money before they can think about spending it. This is, in essence, is a great idea. However, there are expenses that you could really benefit from – like buying your own house.
How to use a house to earn you extra cash
So how exactly can you earn from your house? Take note that this is not just about using the equity of your home. This is more of how you can buy that home (even if it is through a mortgage) and still let it earn you extra money.
Here are 3 specific steps that you can follow.
Step 1: Save up for a down payment.
This is the first thing that you should do. A down payment is the best way that you can save on the interest of the home loan that you have to get. An article from NOLO.com provided a couple of reasons why you need to pay the biggest down payment that you can afford. First of all, you do not have to pay the additional cost of a Private Mortgage Insurance is you can give at least 20% of the selling price as your down payment. You can also benefit from the lower monthly mortgage payment. That is because paying more upfront will result in a lower home loan. In connection to that, you will also pay less in terms of interest. The interest rate of a mortgage is usually very low – but you will save more if you borrow a lower amount. If you also have a high down payment, you will be appealing to lenders because a lower loan would mean they could earn more in case of foreclosure. They can sell your house for its value even if you borrowed much less because of the down payment you provided. Not only will you be attractive to lenders, the sellers will also prefer you over other buyers because of your ability to shell out a high down payment. It is a win-win situation for everyone if you can save up for a huge upfront payment for the house you will buy.
Step 2: Build up your credit score.
This is another way for you to save money on your home purchase. If you have a good credit score, the mortgage lenders will view you as a low risk borrower. This means they do not have to protect themselves by giving you high interest rates because you have a good credit reputation. That means you can be trusted to pay off your loan. But if you have a bad credit score, that can affect your interest rate. While you are spending a couple of months or a few years saving up for your down payment, you can opt to build up your credit score in the process. What you can do is to use your credit card for small purchases – things that you can pay for in cash. Instead of paying in cash, use your card and just put aside the cash in a secure place. Once the billing of your card arrives, you can pay off the balance in full. If you do this for a couple of months, your credit score will surely go up.
Step 3: Look for a house with a space to rent.
The next step is probably the most challenging but it is the answer to the question how to earn money using your house. You need to look for a house that has a space for you to rent out. Some homes are built with an accessory dwelling place. These are usually the garage or basement that can be lived in by someone else. In some cases, the entrance to these parts of the house is separate from the main house – which gives those living in it some privacy. If you can price the lease right, you may be able to let it pay for your mortgage and at the same time, get some extra cash to put in your pocket. What is great here is that you basically do not have to pay anything towards the house. You have removed your own rental cost because you now own your house and the mortgage is being taken cared of by your tenant.
Isn’t that a great way to earn money from your house?
Do all of these steps and you can be assured of income from your newly bought home. As long as you can minimize the mortgage payments and maximize the rental price, you should be able to meet your income increase goals.
Other ways buying a house can put money in your pocket
Now that you know how to earn money through the accessory dwelling in your house, you may be interested in other options to earn from your house.
An article from USNews.com revealed how buying a house is a great investment for anyone – especially Millennials. They are specifically targetted by the article because this is the generation who are in a difficult financial situation. They got out of college with high student loans and low job opportunities. This made them more cautious to make investments. They also had to delay a lot of milestones in their life – moving out of their parents’ house, getting married, having children, etc.
Most of them have started investing but financial experts are urging them to buy their own house because it has a lot of potential to improve their net worth. The article revealed that this is because of the following advantages:
- You do not have to pay rent. There is nothing wrong about renting – except for the fact that you are giving away your money to make your landlord rich. You have to know that there are houses for sale that is affordable enough to give you the same monthly amortization as the average rental price. Even if you get a home loan, the payments you will make on a monthly basis will increase the equity in your home. That increases your personal net worth.
- You can earn from the house if you decide to sell it. Generally, real estate investments appreciate over time. This is especially true if you bought a property that attracts professionals to work in the area. You can flip the house you bought and earn a decent amount of profit from the sale.
- You can enjoy tax breaks. Another benefit is the tax breaks that you will get from owning a home. The interest on your monthly amortization is tax deductible – which will save you money in the long run. Not only that, if you decide to sell the house and the value did not increase by $250,000 from the time you bought it, then you do not have to pay capital gains tax. That means you get to keep the profit for yourself. At least, you also have to live in that home for the past two years as your primary residence.
- You can add to your retirement income. Investing in real estate is actually a great way for you to add to the retirement income that you are saving for. This is an investment that grows over time because of the appreciating value. You can choose to sell this house before you retire and you should be able to add the money towards your retirement fund.
Learning how to earn money using your house is not difficult. You just need to have the guts to pursue it and to be smart about your decisions.