Is it time for you to take that big step forward into homeownership? Maybe you have been living in a rental unit for years and have grown tired of having neighbors who share a wall with you or stomp their feet above you. A growing family is another reason to scale up the size of your living space.
Whatever the reason for leaving the renter population, owning a home can be a big upgrade for your lifestyle. Instead of money being thrown away on rent each month, your mortgage payments start to build equity in the home that can benefit you financially in the future. Also, you can make changes to the property that would not be allowed with the existence of a landlord.
If you are looking to buy your first home in the Philadelphia area, then there are some things that you need to know before you start the process.
Determine Your Property Needs
It can be easy to start searching for homes without knowing what you need. Scrolling through Zillow or another real estate listing site can even be addicting as you admire houses on the market and what they are going for. Use this time to figure out what you need in a new home. What non-negotiables must be present to interest you in a particular home? How many bathrooms? How many bedrooms? What square footage are you hoping for both inside and outside? What type of kitchen can serve your family’s needs? Determining the minimum requirements for your new house is a great way to filter your search.
Now it is time to think about the biggest homeownership obstacle there is; affordability. Most first-time buyers, and even those who have owned multiple homes, do not have the cash to cover the upfront cost of a home. This is why most buyers secure home loans, agreeing to pay back the principal plus interest over time. Many loan products on the market can help you afford your home, depending on life circumstances. Many borrowers seek out conventional loans if they have decent credit scores and income. Jumbo loans can be used for larger purchases that exceed the limits set by Fannie Mae and Freddie Mac. Low-income borrowers may require FHA loans with lower requirements. Members of the military and their families can benefit from VA loans. Research the products that you qualify for to find the right home loan.
Hidden Costs of Buying a Home
Most first-time buyers are aware of the basics for financing a home, like the loan itself and homeowner’s insurance. But many hidden costs come with buying a Main Line or Philadelphia home. The main source of these payments is closing costs. To finish the transaction, you will have to pay for these additional expenses. They typically include attorney fees, loan creation fees, realtor fees, title search fees, and more. Other hidden costs will come along with owning the home itself, such as utilities, garbage removal services, maintenance costs, and private mortgage insurance depending on your down payment.
Payment assistance is not the same thing as financing your home with a loan. Many states offer benefits to different categories of buyers to help cover closing costs or down payments. Some programs may include tax benefits or interest rate advantages. Philly’s First Home Program is one example where first-time buyers could receive a grant of up to $10,000 with the purchase of a single-family home as long as they live there for fifteen years. A mortgage credit certificate is another option that grants a federal tax credit so you have more money to cover monthly payments. The HOMEstead down payment loan is a second, interest-free loan up to $10,000 that you can take out for a down payment or closing costs that gets forgiven after five years. These programs make home affordability much more accessible.
Change in Responsibility
When you rent a living space, the landlord or property manager is responsible for upkeep. They must maintain the property and respond to maintenance requests. When you own a home, everything falls on you. This level of responsibility is a big change for many first-time homeowners who have gotten used to the rental lifestyle. Make sure you are prepared to take on this extra responsibility before deciding to purchase a home in Philadelphia.
In the End, Homeownership is Well Worth it
Even with all the obstacles and investments that stand in the way of you owning a home, it is still a huge privilege to own a house. As you build equity, you can make changes to customize the home so that it suits your family’s needs, something that is not allowed for renters. Now that you have a clearer picture of what it takes to purchase and own a home, you can get started with your search feeling confident.