Expensive Real Estate—Is It a Viable Option for First-Time Homebuyers
Nowadays, the American dream isn’t just a white picket fence and a compact yard. First-time homebuyers are becoming more ambitious in their desire to purchase a home in more expensive real-estate markets—a goal that isn’t always within reach. Though a tough feat to accomplish, home shopping in a pricier area isn’t impossible. With the appropriate expert financial advice, you can turn your property dreams into reality.
Tip #1 – Outline Your Budget
Ideally, homebuyers who want to avoid mortgage loans can shell out for the entire property in cash. However, this isn’t usually the case. Thus, it’s important to craft your budget according to your income and assets—not the home you’ve set your sights on. Most lenders will recommend shopping within 28% of your income—so stick to your limits.
Tip #2 – Start Saving for a Hefty Down Payment
A traditional down payment of 20% will often secure mortgage applicants with the best possible loan terms. However, most couples or families will only be able to shoulder 10% or less, with FHA loans requiring as little as 3% and VA loans foregoing a down payment altogether.
That being said, VA loans only apply to members of the military community and FHA loans cater to stricter loan limitations. If you’re determined to purchase a particular home that you can’t afford in the meantime, take the time to save up for at least 2 months’ worth of mortgage payments.
Tip #3 – Level Your Expectations
If your dream home seems a little too far out of reach, re-examine what you’ve outlined on your list of must-haves. Letting go of features that were once non-negotiables can be a difficult parting but knowing that your first home need not be your last can put things into perspective.
Plus, purchasing a home in a pricier area can help build equity along the line, even when moving into a fixer-upper that isn’t quite your taste. Prioritize features that are both visually impactful and highly functional. You never know—it may get you to stay down the line.
Tip #4 – Plan Your Long-Term Stay
Purchasing a home makes the most sense when you plan to inhabit it for at least a few years. If you’re considering moving house within a year or two, you may not break even on your initial investment at all. You can’t simply count on a home price appreciation to justify your purchase—anything can impact the housing market when you least expect it.
If, down the line, you plan to leave your home, make the appropriate adjustments to increase its value. Consider affordable but impactful home renovations that can serve a multitude of purposes—whether a skylight, loft, or space-saving features.
With dedication and an open mind, you can achieve your first-time home buying goals even in an expensive area. By keeping your priorities in check and saving up for a decent down payment, purchasing a property in a high-end subdivision is attainable.
If you’re looking for a mortgage, schedule an appointment with Move Mortgage. If you’re buying and financing a fixer-upper, we don’t want you to feel like you’ve settled. With a competitive mortgage rate in your pocket, you can close your loan in just 7 easy steps!