Buying A Home – How To Find The Right Starter Home

As a homebuyer, you probably started out with a dream of the perfect home you wanted to buy. However as you searched the market, reality set in, and you had to lower your expectations on the square footage, location or some other feature. Instead of a five bedroom home, you had to settle for a three bedroom with some of the kids sharing a room. Or maybe you had to sacrifice the large family room for a smaller one.

Now just because you have to reduce your expectations doesn’t mean you can’t find opportunities to buy a great starter home. One great strategy is to locate a home in an up and coming neighborhood. These opportunities are easy to spot by driving through a neighborhood and seeing if any remodeling activity is going on. Checking out the habitats of local artists can also lead you to an up and coming community.

While you may want to buy the ideal home from the beginning, finances may dictate you enter the real estate market with a starter home. As you build up equity and save money over time, you can purchase a larger home in the future. This method words perfectly for homebuyers who expect their salary to rise in the future. Even if you don’t move up to a better paying job, the equity from your starter home will still help you purchase a better home. Even though there are benefits to owning a starter home, you should know about these 3 facts before you purchase one:

1) Puts A Strain On Your Budget – Buying a home can put a dent in your savings. Besides the initial down payment, you’ll incur additional costs such as: closing costs, appraisals, property inspections, agent commissions, and moving expenses.

You might be misled to believe that buying a home with less square footage will cost significantly less. Unfortunately you’ll find the price difference to be minimal due to the high cost of land in some communities, especially in nicer areas.

2) Pick A Mortgage With Money Saving Terms – It’s not uncommon for you to find loans charging you prepayment penalties and points. These fees can eat a good portion of your equity. If possible, shop for a home loan with no prepayment penalty or points.

3) Be Prepared For Tough Times – Real estate market conditions can change at any time. If the market value of your home depreciated in the next few years could you survive selling the property at a loss? This also means you may not have any equity to move into a larger home. Being prepared for a down time in the market helps you survive until the market improves.

In spite of these precautions, many homebuyers follow this strategy to get their foot into the real estate market. Not only do you enjoy the pleasures of home ownership, but you’ll gain experience in being a homeowner.

Are you looking to get into a starter home? Then check out these local Anaheim Realtors and Anaheim Hills Realtors to help you find one.

Posted by Sarah P. Shimanski on Mar 14th, 2010 and filed under Investing. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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