Tips for First-time Home Buyers on a Budget
Whether you are thinking about purchasing a Brownstone in Back Bay or a home in South Boston, the process of buying your first home can be overwhelming. Young adults who have been out of college for a couple of years, recently married couples and newly formed families may want to buy their first home but have budget restrictions. Taking some factors into consideration can help you to land your dream home without going into massive debt.
Purchase a Starter Home
Many beautiful homes in the outskirts of Boston MA fall into this category. While starter homes can come in many different forms, they are often on the smaller side. Many of the starter homes can be found in Cohasset, Hingham, Lexington, Milton, Quincy, South Boston Wellesley, and Weymouth. Although if you work in Boston, you may have to commute, the home prices in Boston have seen dramatic increases over the last few years; making pushing first-time homebuyers to the suburbs. Property value lines are drawn by the many neighborhoods in the Greater Boston area, so be sure to search by neighborhood.
Understand that Your First Home Won’t Have Everything You Want
For example, many starter homes may have two bedrooms or one bathroom, or they may have an eat-in kitchen as opposed to both a kitchen and a dining room. Some starter-home owners decide to eventually expand their houses, and others will sell the home, make a profit and purchase a larger one in the future. Look at your first home as a stepping stone. After a couple of years, with some minor upgrades and a little luck, you may be able to sell that home for a profit. This lets you invest the equity from the sale of your first home as a down payment on your next home. The larger the down-payment, the less you pay for your monthly mortgage. Another benefit of this “step-up” process is that you are NOT taxed on the profit from the sale of your primary residence (with certain limits). This lets you re-invest 100% of your starter home’s equity into your next house.
Accept a Longer Commute
Houses located in Boston proper with public transportation will come with a higher price tag. While having a longer commute can certainly cut into work-life balance, it may prove worth the effort for the near future in order to have a home. If your ultimate goal is to live in the city of Boston, search for the best deal in the suburbs, put a little “sweat equity” into the home and sell it in a couple of years. Using the equity that was built in your first house to put a larger down payment on your next home is the best path to the home of your dreams.
Evaluate the Necessity of School Districts
Many newer families insist on living in an area with a good school system. For that reason, real estate values are definitely affected by the quality of the school system. Plenty of people purchase properties based on the quality of the school districts in which the houses are located. New England is known for some of the best school systems in the country. Many of the close suburbs like South Boston, Cohasset and Hingham have great school systems worth looking into. While you do want to ensure that you live in a nice community with safe schools, consider if other features of the educational environment, such as test scores, are really of concern right now. For example, paying to live in a school district with high test scores when you don’t plan to have children any time soon may simply waste money.
Find Charm in Simplicity
Opulent houses with lavish backyards and pools can certainly generate plenty of attention. Still, though, quaint properties have their own charm. With the right creative mind, a small and old home can quickly turn into a charming rustic retreat or a swanky dwelling with an urbane vibe. Buyers who can envision smaller homes with their unique sense of style infused may find that more possibilities appear on the market. Make the best out of a yard that would otherwise not be an option in the city.
Look at Condominiums
Buying a condo can be a great way to get into your first home. Many condominiums simply cost less and can provide a taste of luxury at lower prices than a single-family property. Condo sales are a slightly different type of purchase as you have condo documents to review and sign off on. These condo docs ultimately lay out the rules and regulations for not only living in the condo complex but the financials behind the “shared ownership” aspects of owning a condominium.
Search for Your Home Like a Boss
The process that you implement to search for your next home can be fun or a lot of work. Many of the best local Boston websites for real estate offer “listing alerts”. Setting up a search with one of these local real estate brokerages can save you a ton of time and effort. Once you have properly set up your Property Search, you will receive an email with the new listings that fit your search criteria and budget. For instance, if you are looking for a home for sale in South Boston, with 2 bedrooms and at least one 1/2 baths and your price range is $300,000 to $325,000, you can have ONLY those listings sent to you on a daily basis. This saves a ton of time browsing homes that really don’t fit your needs and your budget.
Avoid sites such as Zillow, Trulia, and Homes.com as they may not be directly connected to the local MLS (multiple-listing-service). The local MLS is the gold standard for the active real estate listings. Working with a real estate agent and frequently scouring advertisements for homes on the market are two strategies that can help buyers on a budget. Regular research is sure to reveal that housing prices are higher at certain times of the year than others. Buying a house during one of the off-seasons can lead purchasers to lower prices.
Seek Eager Sellers
Connecting with the right seller is also a way to get a lower price on a house that is suitable for the individual or family. Going through listings might seem like a time-consuming endeavor, but really analyzing the details can help. For example, some listings may note that the sellers are eager. If the sellers are eager, they may more willingly negotiate on the price of the house. Look for homes that have been reduced in price, especially multiple times. While potential buyers should not necessarily expect tremendous reductions on the prices, trying doesn’t work.
Take on Some Work
Houses with all brand new features are likely going to come with a higher selling price. People who are handy around the house might decide to look into homes that are in need of some work. Another strategy is to negotiate based on the condition of the house. Current owners of houses that are in need of some repair might willingly reduce the price of the property so that they don’t have to do the work themselves.
The decision to purchase a house is usually quite exciting; however, it is a choice that can come with some worry as well. Many of these worries are related to the costs. Smart buyers don’t want to put all of their funds into a house and find themselves left with no money for emergencies, repairs and personal expenses. Fortunately, with some smart advice, making a financially sound decision is possible for first-time homebuyers who are on a budget.