How to keep down the cost of buying a home?

Today's housing boom in home building is by passing millions of families who lack the money to buy the expensive houses that most builders are putting up.

A new study by Professional Builder, a major trade journal, finds that $81,000 is about all that most families are willing and able to pay. A whopping 42 per cent of prospective buyers are looking for something under $70,000.

Homes selling for less than $70,000 are a rarity in many cities, but substantial, well-built homes can be had for less than that in many places - sometimes for a good deal less. I have been watching the Las Vegas real estate market and you can get a fixer upper out there cheap.

Buy a "basic" First Home

It may not be the home of their dreams, but many families are now settling for a "basic" house - one that is modest in size and features - to be able to enjoy the tax and investment benefits of home-ownership.

In an attempt to slash prices, builders in several cities have eliminated the family room, extra baths, the garage and certain appliances. Many are going to standard sizes in windows, doors and other materials to eliminate waste and are using more factory-built parts to cut costs at the home site. The result is a price tag below $70,000, sometimes even below $50,000, on these houses. Wherever the models are offered, buyers are snapping them up.

Put in "sweet equity"

People who make the effort to acquire new skills find that they can pare thousands of dollars off the cost of a new home by doing much of the construction work themselves. These families are linking up with builders who erect only the shell of a home - exterior walls, roof, interior studs and sub floor.

Financing is sometimes a problem for people who want to try sweat equity, because many lenders will not grant a mortgage until a home is completed. Jim Walter provides its own financing for do-it-yourselfers. The term of a loan is 15 years, and the interest rate is about 11.5 per cent - well above the 9 per cent charged on conventional mortgage loans. And buyers are expected to own their building lot free and clear.

Fix up an older house

While existing homes often are priced as high as new models, some families get over this hurdle by buying older dwellings in marginal neighborhoods that have a solid chance of reviving.

Many such neighborhoods are benefiting from major renewal projects, and a number of cities have earmarked thousands of dollars of local and federal funds for home-rehabilitation loans and for improvement of streets, parks and other community facilities.

Consider a mobile home

With the prices of regular homes soaring, more people are choosing a type of shelter that they might have snubbed in times past: mobile homes. The only moving of most of these homes nowadays is from factory to owner's site.

Not only is the quality of factory-built homes improving, but the price gap between them and conventional housing is becoming wider every year. A site-built house costs almost twice as much as to produce as a similar mobile unit.

One of the fastest selling types of mobile homes is the "double-wide," which is made up of two sections bolted together. Placed on a concrete foundation on the home site and provided with a pitched roof, aluminum siding, shutters and downspouts, the double-wide often is indistinguishable from a conventional dwelling. Yet the price is generally less than $45,000.

The manufactured house is not welcome everywhere, however. Some communities have zoning laws and building codes that prohibit such shelter. Mortgage lenders are frequently skeptical, and labor unions in certain cities object to the manufactured homes.

Still, most of these roadblocks are not as big as they were just a few years ago, and experts predict an expanded market for mobile homes as the price of conventional housing soars.

One of the best things that I did was open up an ING Direct account online and have money taken out of my check every week and have it placed into a savings account. The interest rate at ING Direct is way higher (currently 4.50% ) than you can get at a bank. The miracle of compound interest will have you saving for that down payment in no time flat. This is how David Bach explains it in his book "The automatic millionaire home owner". If you are looking to buy a house you need to get this book it will save you money.