Setting out to buy a starter home is exciting, but it’s also daunting for many of our clients. Trying to determine how much you can afford is likely at the top of your list of concerns, but you don’t have to navigate that process alone. Your starter home budget will not only dictate the type of property you can afford but also determine your overall financial well-being for years to come, so we understand the importance of setting a price that is both comfortable for you and realistic for the market.
In this process, collaborating with a local lender becomes paramount, as they play a pivotal role in helping you explore diverse mortgage options tailored to your unique financial situation. That’s where we come in. We can walk with you every step of the way to make sure you have found the right financing for you and can begin house hunting with mortgage pre-approval in hand.
Contact us any time to apply for pre-approval, and keep reading for our tips to help you set your starter home budget.
Creating a Realistic Budget for Your Starter Home
Before delving into the world of mortgages, it’s essential to establish a comprehensive budget that reflects your financial reality. Begin by assessing your income, including all sources such as your salary, bonuses, and any additional revenue streams. Next, list your monthly expenses, covering everything from utilities and groceries to entertainment and discretionary spending. This thorough examination will provide a clear picture of your financial standing and help you determine how much you can allocate towards homeownership.
When setting a budget for a starter home, remember to factor in potential homeownership costs beyond the mortgage payment. Property taxes, homeowner’s insurance, maintenance, and unexpected repairs should all be considered. Allocating funds for these expenses ensures that you are prepared for the full scope of homeownership responsibilities.
During the application process, we will gather as much information as possible to help give you mortgage pre-approval for an amount that is right for you. By comparing our numbers with your own, you can confidently set your home buying budget.
Comparing Apples to Apples
When you find out what your monthly mortgage payment might be after getting pre-approved, it’s time to get into the details of your budget. Remember, as you compare two homes with the same sales price it is not comparing apples to apples most of the time.
One home might need more updating, landscaping, or upkeep, or perhaps one home will include higher HOA fees or different utilities. Factor in all of these things as you decide which home fits well within your budget.
Remember, buying a starter home is different from buying your dream home. You will likely need to make some concessions here or there, so make a list of your must-haves and your deal-breakers, and let the rest of the criteria on your wish list be negotiable. As your investment builds equity, you can work toward buying that dream home in the future knowing you have already become a home owner and taken the biggest leap toward that goal.
Choose the Right Lender
We know it might sound bias coming from us, but the lender you choose really does make a difference. Not every lender has the same flexibility or expertise, so choosing a local expert with years of experience is essential. We can help you explore all the potential mortgage types that might work for you, comparing the benefits of FHA loans versus conventional loans and finding out if you might qualify for a USDA loan or a VA loan.
You may even find that buying an investment property is within reach, or that house hacking is the right strategy for you. We will help you navigate the entire journey without becoming overwhelmed by the options.
Ready to find out more about buying a starter home? Contact us any time to begin.