According to a new report from Gallup, 30% of surveyed non-homeowners in the U.S. think they’ll buy a house within the next five years. Nearly one in four (23%), on the other hand, believe they’ll only be able to do so within the next decade.

The many challenges of homeownership, primarily financial-related ones, are making buyers, particularly first-time homeowners, postpone their purchase plans. The expenses associated with owning a home, after all, don’t stop at its purchase price. There are many other ongoing homeownership costs, from maintenance to insurance.

If it has always been your dream to own a house, don’t let these challenges faze you, as there are several ways to conquer them. We bring you insights into these obstacles and homeownership tips in this guide, so read on.

The Housing Affordability Crisis

Housing affordability in the U.S. has plummeted considerably over the past half-decade.

Oxford Economics says this drop has affected all major metro areas and is due to soaring house prices and mortgage rates having almost doubled. Most metros with the most expensive housing are in California, including San Jose and San Francisco. Conversely, some of the most affordable are in Decatur, IL, Cumberland, MD, and even New York’s Elmira.

Since there’s a significant area-based difference in homeownership costs, one way to conquer this challenge is to adjust your location preferences.

Suppose your first choice is NYC. According to NYC.gov, the median sales price of homes here reached

$785,000 in early 2024. Homes in Manhattan are among the most expensive, while many of those in NYC’s outer boroughs (e.g., the Bronx, Brooklyn, and Queens) are more affordable.

Rising Mortgage Rates

You can’t stop the market’s mortgage rates from increasing since several factors are out of your control. They include:

• Inflation
• The Federal Reserve Bank (“the Fed”)
• Housing inventory

Still, there are things you can do to prevent your mortgage rate from skyrocketing or your home loan from becoming too expensive.

Increasing Down Payment

Consider making the highest down payment you can afford.

As CNBC explains, while it’s not always mandatory, the traditional standard for down payments is 20% of a home’s purchase price. Many mortgage options also require a lower down payment, such as government-backed ones.

If you can, stick to 20% or even higher. Doing so can lower your loan-to-value (LTV) ratio, a comparison of your property’s appraised value versus your mortgage. The larger your down payment, the higher your equity (the “portion” you own in the house), and the lower the amount you need to borrow from your lender.

The less you borrow, the less risk your lender takes on. The reduced risk can make them more willing to lower the mortgage rate they’ll charge you.

Owing your lender less means you’ll pay less in mortgage interest fees, too. You can also avoid the extra expense of purchasing private mortgage insurance (PMI). Many lenders require PMI for borrowers who make a down payment of under 20%.

Checking Your Credit Score and Report

The higher your credit score (a measure of your creditworthiness), the better your odds of getting your mortgage application approved. Lenders also look at borrowers with high credit scores as “low risk,” which can then translate to potentially lower mortgage rates.

Even if you’re certain that your credit score is high and your credit report is clean (e.g., you’ve always paid your financial dues on time and you don’t have too many outstanding high-amount loans), you should still double-check them. A good enough reason is that they can be wrong on paper.

Consumer Reports, for instance, found that almost half of the surveyed Americans in its Credit Checkup study said they discovered errors on their reports. Over a quarter also said the mistakes were “serious.” Such errors can cause your credit score and creditworthiness to drop, resulting in mortgage lenders rejecting your loan application or charging you sky-high interest rates. Prevent these from happening by taking advantage of your free credit reports online and disputing all mistakes you find.

Emotional Attachment to Current Residence

Suppose you’ve found the best possible new house but are experiencing “cold feet” due to the sentimental value and connection you have with your old home. If you let these feelings take over, they can cloud your judgment, especially with rising mortgage rates.

The above raises the question, “How does emotional attachment impact moving decisions, especially when rates rise?”

It can cause you to make poor decisions, such as:

• Focusing too much on the sentimental value of your current home and overlooking its flaws
• Overpaying for a new home that closely resembles your old place
• Choosing to stay in your current house (which can result in you missing good opportunities or prevent you from having a fresh start)
• Spending more on resolving home issues and repairing your current house, which is money you could otherwise save up to buy a home in much better condition

Although it’s natural to feel sentimental, prioritize the future and use logic to find a new home that will fit your current and long-term needs.

Home Maintenance Challenges

Another of the top challenges of homeownership is the ongoing (and continuously rising) cost of home maintenance.

According to Today’s Homeowner, annual home upkeep costs range from $14,000 to $18,000, depending on the location, with the national average being $16,000. The city that tops the list is Kenilworth, IL, averaging $27,661 yearly, while per state, it’s New Jersey, averaging $18,151. With such high costs, it pays to allocate at least 1% of your home’s purchase price for its yearly maintenance.

If your new home costs $250,000, for instance, it’s wise to set aside $2,500 yearly for its annual upkeep. Even if you end up not spending this much, it’s still for your benefit, as it helps you have a fallback or build your emergency fund.

Be Smart and Overcome These Challenges of Homeownership

From inflation to rising mortgage rates and increasing maintenance costs, these are just some of the primary challenges of homeownership. With savvy practices, though, such as making a bigger down payment, ensuring your credit score and report are correct, and setting aside enough for maintenance, you’re more likely to conquer these obstacles.

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