Buyers who want to start a family, but don’t yet have children, sometimes focus too much on their home’s location, size and school district, Deihl suggests. Resetting those parameters can make it easier to buy a first home.
“Buyers may be in a position where schools won’t impact them for six or seven years,” Deihl says. “That’s a good opportunity to buy in the city, make some money and roll that into a community where they want to be longer term with the kids.”
How about a Foreclosed Home?
A bank-owned foreclosure also might be a good option, though those aren’t as common as they were a few years ago.
First-home buyers shouldn’t be scared off by the stigma or horror stories about the poor condition of foreclosure homes, Deihl says. Some properties might need to be cleaned, but many have major components like plumbing, electric, heating and air-conditioning system and kitchen appliances in working condition.
City or Suburb?
Buyers who sacrifice location for affordability can find themselves in a neighborhood far from major job centers with a long daily commute and expensive transportation costs.
Sometimes that trade-off makes sense, but not always, says Cathy Coneway, a broker in Austin, Texas.
“You have to look at how much you make and how much you can afford to spend for gas,” Coneway says. “You might actually be better off buying a house that’s closer to town so you have more cash flow for property taxes, insurance and living expenses.”
Compete with a Loan Approval
When a well-priced starter house comes on the market, the quest to buy it can be what Deihl characterizes as “super-competitive.”
One way to strengthen an offer is to present a loan preapproval that includes everything but a title search, appraisal and hazard insurance, says Jay Dacey, a mortgage broker at Metropolitan Financial Mortgage Co. in Minneapolis.
A strategic phone call might help, too.
“We call the listing agent and say, ‘Mr. and Mrs. Jones submitted an offer on your property. Not only are they preapproved, but they’ve gone through the underwriting approval process with our bank,’” Dacey says. “That makes the offer stronger.”
Marcie Geffner writes about mortgages and other personal finance topics for Bankrate.com.
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