Can a Side Hustle Help You Buy a Home

Home buying has become more expensive in the last few years. Some homebuyers are looking for ways to make homeownership more affordable, especially when it comes to making a down payment and securing the lowest current mortgage interest rate possible.

The website Self.com recently conducted a survey that found around 45% of American workers supplement their income with a side hustle. What is a side hustle? It is a second job on a part-time basis, or odd jobs picked up occasionally to bring in extra money. Some have picked up extra work to help them meet a financial goal like purchasing a home.

Ways Extra Income from a Side Job Can Get You Closer to a Home Purchase

It Can Help with a Down Payment and Closing Costs

Picking up some extra income through extra work can bring you closer to covering the down payment and closing costs of a mortgage loan. Often homebuyers think about a down payment and consider finding a home loan that requires less than the traditional 20% but they often overlook the need to pay for closing costs as well.

Should you opt for a loan with a lesser down payment requirement? It may be more beneficial to save up some extra money and make a larger down payment. How much you put down on a home and what type of loan you use really should be talked over with a mortgage professional and maybe even a financial advisor.

“Some financial freedom experts will advise that it is always best to shoot for making as large of a down payment on a home as possible because it eliminates the need to pay for mortgage insurance, decreases the amount of money you need to borrow, and helps to win a lower mortgage rate.” According to Greg Kennedy, Calgary Homes for Sale Professional.

It Helps to Eliminate Other Debts

Having a mindset of picking up extra work to pay off debts is a very beneficial way to make buying a home a reality. The lower your debt-to-income ratio is the better it looks on a mortgage application. A lender sees a borrower with a significant amount of other mandatory payments as a bigger risk.

In addition to lowering your debt-to-income ratio, it can also raise your credit score. A borrower’s credit score is one of the biggest determining factors in loan approval and the interest rate a lender will offer.

In addition, not having other debts helps to make paying monthly mortgage payments more affordable in your everyday life. It frees up more of your monthly income to make payments on items that are more important to you.

It Helps to Build Your Savings Account

Simply having a healthy savings account with a good amount in it is beneficial as well. The more financially solid you are the better it looks on a mortgage application. Not only that but you will have available funds to take care of the added costs of home ownership and it can help with unexpected emergencies. Some financial experts advise the no matter what stage of life and what your goals you should always try to have a savings account with enough money to cover six months of living expenses.

Where Should You Look for Extra Work?

The best way to decide what extra work is worth taking on is to ask yourself what your skill set is and what you enjoy doing within that skill set. You may be surprised to find out that there are many possibilities needing what you have to offer.

You could offer to run errands for people, you could drive people with Uber or Lyft, you could pick up a shift as a Barista, you might enjoy babysitting, maybe becoming a fitness instructor, or simply giving a few hours of time in a retail store.