Buying A Home - 3 Starter Facts You Need To Know

By Sarah P. Shimanski

If you're considering buying a home, you probably have a wish list of the ideal features you want your new home to have. But as you browse the local real estate market, your heart sinks as you begin to realize you'll need to lower your expectations for your new home. Instead of a spacious home with a perfect view, you may have to settle for a cracker jack home with a view of your neighbor's wall.

Even though you may have to sacrifice some features, it doesn't mean you can't use a little creativity to get into an affordable home. Be on the lookout for an up and coming neighborhood. Telltale signs include homes being remodeled or new landscaping being installed. You can usually get in this type of community at a reasonable price. Also follow where the artists go. It's not uncommon for artists to change a rundown community into a desirable one.

While a starter home may not have all the ideal features you want in your dream home, it can get you in the door of the real estate market so you can start building equity. Hopefully with the right market conditions in the future, you can save enough to buy a bigger and better place. This strategy works great if you expect your income to increase in the future. Even without a better paying job, you can still move up into a better home using the equity from your starter home. In spite of the benefits of purchasing a starter home, there a three facts you need to be aware of:

1) Puts A Dent In Your Savings - Buying a home is one of the largest investments you'll ever make. You'll have to put a large sum down, plus there will be other expenses such as: moving costs, closing costs, property inspections, property appraisals, and realtor commissions.

If you think buying a smaller square footage home will solve your problems, think again. Just because a home is tiny doesn't mean it's going to be cheaper. Land costs can be expensive depending on which part of town you plan to buy into. This especially applies to nicer neighborhoods.

2) Get The Right Mortgage - If you can, be sure the mortgage you're applying for doesn't have a prepayment penalty. This gives you freedom to sell your home anytime or pay the loan off early. If possible, find a loan with low or zero points as this will keep more money in your pocket.

3) Keep Your Options Open In A Down Market - In a tough economy and a sluggish real estate market, your home won't appreciate much. If this happens, be aware of the potential consequences if you need to sell your home during this time. You could end up losing money on your home and have a difficult time upgrading to a bigger house.

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. - 31862

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