Lowering Your Mortgage Payment Through House-Hacking
Photo: Riley Blanks
At Open House we are huge fans of house hacking. In the off chance you haven’t heard us mention house hacking before, house hacking is supplementing your monthly mortgage payments, taxes & insurance (henceforth referred to simply as “mortgage”) with monthly income.
Our client, Alison, took full advantage of house hacking, as well as incredible first time buyer loans, to decrease her monthly payment exponentially. She started with a $1,710 monthly mortgage payment, and now pays around $400 dollars! That’s insane!
Want to learn how she does it? Of course you do! So we asked Alison a couple questions about her home buying experience. You could really learn so much from Alison and her house hacking skills.
Interested in actually buying a home and house hacking? We’d love to see you at one of our workshops or let’s set up a call!
How long have you lived in Austin?: 5 years
When did you buy your home and how old were you?: November 2019. 27 years old.
Was this your first home purchase?: Yes
What industry do you work in?: I work in a tech space for a SaaS company that is directed towards the event and exhibition industry
What do you love about living in Austin? I love the energy of the city. There are so many creative and hardworking people in one place which makes for an abundance of things to do, explore and have fun. Coming from Minnesota, the sunshine is always a bonus as well.
Income: $50-70K.
What part of town did you buy your home in and why?: I bought in the North Lamar 78753 area because of the estimated growth in the next years and relatively close proximity to the city. So much new development is happening and now I will be very close to the new light rail as well.
What type of property did you buy?: Single Family Residential (SF-3 Zoning)
How many bed/baths & sqft?: 3 bed/2 bath with an ADU potential shed in the back than I am renovating to be a micro apartment.
What year was it built?: 1971.
List Price: 270k.
Purchase Price: 263k.
Monthly Mortgage: 1710.00 (No PMI!)
Closing Costs: Seller covered
Down Payment: Used a first time buyer program that assisted in down-payment - Bancorp South Right @Home loan (https://www.bancorpsouth.com/mortgage/types-of-mortgages/right-at-home). All the money I put down, I ended up getting back. Amazing opportunity!
Interest rate: 4.2%
Before and Afters:
House-Hacking: I am planning on renting out the micro apartment that I am renovating in my backyard currently. Once that is done, I plan to list for about $750-800/month.
Roommates: I have two roommates currently that pay $600/month.
What is your average monthly mortgage payment (or estimated) because of house-hacking?: $400
Were the costs associated with purchasing a home higher or less than what you expected?: In reality, much lower. I was previously under the understanding that I wouldn’t be able to buy without 20k in the bank to use towards a down payment.
If you utilized a home buyer program in anyway, please describe how it helped you and which program it was: See previous answer regarding down payment but this is the program - life changing to realize this option was out there! https://www.bancorpsouth.com/mortgage/types-of-mortgages/right-at-home
What would you tell someone who is on the fence about home buying because they are scared of the costs associated with it?: If you are crafty, owning can be a situation that you can make work for you and give yourself a locked in rent freeze in a way. That is so important to think about with rent prices surging every year and the cost of moving, deposits, etc.