Some people spend so long sitting in their apartments planning what they want in a dream home that they go into their first home purchase expecting to hire home builders to build them their perfect dwelling. But the reality is that almost no one can afford their dream home right away. Instead, they need to begin with a starter home and work their way up the property ladder until they finally reach their goals. Here are some tips on how to be realistic when searching for startup homes.
By the time most people are able to search for their first home, they've built up a respectable nest egg with which to make a down payment. 20% of the purchase price is the norm. If you haven't, you're not ready to buy condos, even if there is a bank who will give you a mortgage with almost nothing in the down payment. Overreaching on your first home purchase will only damage your credit rating down the line and put you in danger of defaulting on your mortgage payments.
At this stage in their lives, most people are either single or have a significant other and their focus is still on their careers rather than starting a family, so the startup home should be small and easy to manage. Even if a larger piece of real estate would impress your friends, ask yourself: do I really want to clean and maintain such a large home? Therefore, buy as much space as you need, not as much space as you think you should want.
When you're buying in a big city, you need to be realistic about what your money will buy you. You're not likely to be able to afford a detached home in a desirable neighborhood. Instead, you may have to sacrifice either space or commute times. So do you want a small condo downtown? Or are large houses for sale a better option? A tiny condo will be all you can afford. Let your realtor show you your options and keep an open mind.
When searching for your first piece of real estate, ask your realtor to look for features that fit your lifestyle. If you like to have dinner parties, you need a formal dining room. If friends often visit, you need a spare bedroom. If you have a lot of sports gear, you need a shed or garage. However, there are many things, such as fireplaces or updated bathrooms that are nice to have but not necessary. If possible, leave them off the list to expand your options. Remember, you can always renovate once you've saved a little more.