Buying Your First House
For most people, buying a home is the largest purchase they will ever make. Obtaining financing, coming up with a down payment, finding an affordable property, and finding a decent home to buy may seem nearly impossible for first-time homebuyers. The following are tips for buying your first house:
Buy a Starter House
One of the most important tips to consider before buying a house is to be realistic about the type of house you can afford. Sometimes getting your foot in the door is more important than buying the home of your dreams. Many first-time buyers purchase a smaller home with plans to upgrade to a larger home later.
A home in a good location or in a neighborhood on the rise will help to increase the value of the home. As a home's value increases, a homeowner can use the equity to purchase a larger home. Purchasing a starter home is a good way to enter the real estate market.
Buy a Home with Great Potential
Homes that have been on the market for a while may offer the promise of a great deal. Not a lot of buyers can see past defects, so a house that elicits very little interest from buyers may be worth looking at. While there are some problems that a buyer is stuck with, such as a home that is near the freeway or a busy street, some unappealing attributes are easy to fix.
Homebuyers may overlook some homes simply because of unflattering furniture placement, old hardware on kitchen cabinets, or the unpleasant look of dingy walls. With a little imagination and work, a buyer can make the house into an attractive place to live.
Buy a Fixer-Upper
Homes that require repair will cost a lot less than a similar house in good condition. If the home is free of expensive problems, like severe problems to the structure or water damage, it may be a worthwhile investment. If a home has severe problems, however, a bank may refuse to lend the money until the completion of the necessary repairs.
Repainting walls and putting in new floors or carpeting are affordable repairs that the new owners can do on a schedule that meets their needs and their budget. Make sure that the house is livable and structurally sound, get a great price, and do the necessary modifications when you are able.
Buy a Home with a Rental
One of the options most often overlooked by new homebuyers is to consider buying a duplex or triplex or a home that has a basement apartment, an in-law unit, or an extra room. The rent received from the rental unit can pay for a portion of the mortgage. Alternatively, consider living in the rental unit and renting out the main living quarters. This will generate more income than the rental and will likely offset a substantial amount of the mortgage.
However, many first-time homeowners are not prepared to become a landlord along with making repairs, landlord-tenant laws, and managing business tax laws. Talk to your real estate lawyer for questions about renting out property where you live.
Buy a Home Jointly
Joining funds to buy a home is an alternative that is appropriate when someone is unable to buy a home alone. For someone already living with roommates, it is just a small leap to buying a home jointly. Co-buyers can buy one space to occupy jointly or buy property that has separate units.
Joint property purchases require meeting with a real estate attorney to explain the different types of tenancy and what would happen if one party decides to sell. A common problem occurs when people buy a home together and one person wants to sell their portion of the property and the other party cannot afford to buy it. New financing may also be required.
Buy a Short Sale
In some circumstances, a home sold as a "short sale" can be a bargain. A short sale is a sale of a home for less than what remains on the mortgage. Lending institutions may use a particular real estate company to handle short sales. If the bank agrees to the sale, the homeowner has no further obligation of paying off the mortgage. In many instances, the sale price of a short sale home is less than other similar properties on the market.
While these homes can appear to be a bargain, other costs may outweigh the bargain price. Consider the following: it may take months for a bank to respond to a purchase offer, the buyer may have to pay higher closing costs than required in a traditional home purchase, or the buyer may have to purchase the property "as-is."
Buy a Foreclosed Home
A homebuyer may purchase a home that the bank has foreclosed on. A buyer can purchase a foreclosed home at several stages: prior to foreclosure, at public auction, or directly from the bank. The price is usually reduced but there may be several drawbacks, including:
- You cannot look inside the house
- You will need to do a title search to make sure there are no other liens attached to the property
- The buyer will likely purchase the home "as-is"
- The buyer may have to evict the former homeowners living in the home
- The bank may be unresponsive to an offer or take weeks to respond
- At a public auction, the buyer needs cash, wire transfer, or certified check
Buy a Home at a Probate Sale
A homebuyer may get a bargain by purchasing a home in probate. The sale of the home occurs either in a court-supervised auction or through private negotiation with the estate's executor. A court auction is conducted when a person dies intestate, without a will and the state or commonwealth sells the property. A buyer may have to visit the courthouse and complete additional paperwork but if heirs are anxious to sell the home quickly, a buyer may benefit from a reduced price.
Buying your first house can seem stressful, but making the right decisions is truly rewarding. See FindLaw's Buying a Home section for additional articles and resources. Contact a real estate lawyer for help answering your legal questions when buying a home.
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