She’s a 28-year-old health care administrator with a steady job, and she’s eager to move out of her parents’ house. Her dream? To buy a modest yet well-kept first home with a fenced yard where her terrier can romp.
Despite the young woman’s yearning for a home of her own, Jacqueline Hoff, the real estate broker working with her, said that her client is cautious about the selection process and is determined to avoid overspending.
“She expects to spend at least $10,000 less than the bank says she can afford,” said Hoff, who’s affiliated with the Council of Residential Specialists (www.crs.com). “Right now mortgage rates are just insanely low and you can get an unbelievably great house for very little. It’s unbelievable how great a starter house you can get for your money in this current market, especially if your timing is flexible enough to hold out for the perfect deal.”
What’s a starter home? It’s usually defined as one valued at or below the median price for a particular market. There are several variations on the theme. But in many regions, first-timers can select among several housing styles.
Do you have a solid job and are you excited at the idea of buying a home in the near future? If so, these few pointers could prove helpful:
• Buy ahead for your future needs.
“Most starter-home buyers, who are typically in their late 20s or early 30s, are shortsighted and buy only for their current housing needs. But if you can afford it, look for a home that will meet both your wants and needs for at least five years. That way you maximize your investment dollars,” said Sid Davis, a real estate broker and author of “A Survival Guide for Buying a Home.”
“Shop neighborhoods. Generally speaking, you want to buy into the most desirable area you can possibly afford,” and be mindful of any future additions to your household, Davis said.
• Consider a starter home that would appeal to a family.
“I don’t care if you ever plan to have kids. Even if you don’t, it’s smart to invest in a house with at least three and, ideally, four bedrooms. If you pick a quality neighborhood, this kind of property will usually gain value faster than a one- or two-bedroom place,” Davis said.
To improve your future resale prospects, also look for multiple bathrooms, which are popular with every generation.
• Hold out for a neighborhood with great schools, if you can afford it.
These days it’s easy for anyone with Internet access to compare one set of schools with another on the basis of student test scores. Most school systems freely disseminate test results, and other organizations also publish them online.
You can also gain more elaboration on the pluses and minuses of various schools in your area by paying a relatively small fee for a report from an educational research service such as SchoolMatch ( www.schoolmatch.com).
• Don’t rule out a government-backed loan for your starter-home purchase.
Many first-time homebuyers are eligible for a low-down-payment mortgage through the Federal Housing Administration. To locate lenders near you that make FHA loans, go to this website: www.hud.gov.
“The only drawback of an FHA loan is you have to pay premiums for government insurance to protect against your possible default. Otherwise, an FHA mortgage could be extremely well suited for buyers with very little cash to spare,” Davis said.
To contact Ellen James Martin, email her at firstname.lastname@example.org.