For those just starting out, a starter home may be the perfect solution to get you into a home of your own and begin building up equity. A starter home should be considered not the ultimate goal but a stop along the way while your income increases and your starter home grows in value. Read on for some tips on making the most of your starter home purchase.
The internet provides buyers with more lending choices than ever before but those in the market for a starter home might want to look no further than their own city. You might need the personalized attention and hand-holding provided by an in-person lender when you are just starting out. Local lenders supply a wide variety of loans, attractive interest rates, and have local connections to help with other needs. For example, personal recommendations from your lender might send you to the best home inspectors, home appraisers, and title companies to use before you close on your new home. Finally, using a local lender supports your local economy and benefits the entire community at large.
Before you start house shopping, go mortgage shopping. There is pre-qualification and then there is pre-approval. You want a pre-approval because it inspires sellers with confidence in your ability to close the deal. A pre-approval not only lets you know the price range to shop within but it also alerts you to credit issues that need to be addressed before you apply for the loan.
Size Doesn't (Necessarily) Matter
There is far more to a home than just square footage so don't restrict yourself automatically to smaller homes. While some smaller homes are more affordable, cost less in maintenance, and may have lower utility costs, that is not always the case. What might matter more are the number of bedrooms and bathrooms. Homes with more than two of those can be quite a bit higher due to demand.
Location Matters But Be Flexible
If you have your heart set on certain neighborhoods or school districts, you might still be searching for a home this time next year. Have some back-up locations in mind and consider up-and-coming neighborhoods that will continue turning around over time. These can be excellent investments for starter home buyers.
Be Ready to Improve the Property
Finally, you cannot expect move-in ready for starter home prices. When evaluating a home, consider what can be later updated or changed and what cannot. For example, if the lot is larger, it can be expanded later on.
For a better idea was what to look for in a starter home, speak with a real estate agent. Companies like Houlihan Lawrence can help.