How To Find a Home That Fits Your Budget Affordable homes exist - here's how to find one Verify my mortgage eligibility (Sep 30th, 2023) Table of Contents Preparing To Shop for Houses Location, Location, Location Choosing the Right Property Type What Size Home Can You Afford? Interior and Exterior Features Home Condition and Expected Repairs The Bottom Line Frequently Asked Questions (FAQs) Home prices have reached all-time highs, but you're prequalified for a mortgage. You've finally accepted that your dream home in the perfect location is out of reach financially - and wonder if you'll be able to find an affordable house. Here are tips for affordable house hunting in a competitive marketplace. Key Takeaways Verify my mortgage eligibility (Sep 30th, 2023) Think about what you'll compromise on to get an affordable home. Don't follow the herd. Seek outdated or cosmetically unappealing properties that might scare off other buyers and ward off bidding wars. Consider a condo or other small starter home. Be flexible about geographic locations to find an affordable home. Preparing To Shop for Houses Before signing up for that online house-hunting tool, contemplate how you spend your time at home currently, how long you plan to stay in your new home, and any changes you foresee during that upcoming period. Homeowners tend to live in their homes for six to 18 years in the U.S.'s 100 largest metro areas. Typically, homeowners live in their homes for shorter periods in fast-growing areas. Verify my mortgage eligibility (Sep 30th, 2023) You'll likely need to compromise on some must-have items to stay within a budget, so it's essential to consider your top priorities and what you refuse to negotiate on. For example, your child might need to stay within a particular school district. Or you could require a certain number of bedrooms in a single-family home for the children you're planning on having. But perhaps you can make do without a patio for entertaining friends, at least upon move-in. After determining your priorities, you can set search parameters with an online house-search tool and ensure that the house you want is one you can afford. You may need to tweak your search if houses regularly sell for more than the list price, or you discover some of your priorities (such as a particular neighborhood or brand-new home) don't fit your budget. Visit open houses to get a sense of what you get for a specific price in a specific neighborhood. Check out a wide variety of homes and keep an open mind. Sometimes online photos don't do justice to the real thing. Verify my mortgage eligibility (Sep 30th, 2023) Avoid considering homes you can't afford, a house too small or too large for your changing needs, and carefully weigh a home you might find difficult to resell in the future or buying in an unknown neighborhood. Location, Location, Location Many homebuyers want a good school district, safe surroundings, pleasant climate, and an easy commute to work - and are willing to pay for those perks. Across the U.S., since 2020, buyers have been competing for suburban properties in addition to urban properties. Even outer suburbs or "exurbs" have seen growth in the past few years and will likely appeal to would-be homeowners seeking affordable housing for years to come. Verify my mortgage eligibility (Sep 30th, 2023) According to real estate site Zillow, desirable features of location include: Closeness to urban core and transit Low-traffic location Near parks and green spaces Walkable with sidewalks Water or mountain views or waterfront location If one or several of these elements don't matter as much to you, you may be able to find an affordable home that isn't as competitive as others on the market. Realtor.com has found that less-desirable location features that could reduce a home's price include: Verify my mortgage eligibility (Sep 30th, 2023) Noise from nearby airports, highways, and railway tracks Within 0.1 mile of a school, fire station, or 24-hour grocery store Within a half-mile of a busy church or a hospital emergency room Near a shooting range, strip club, power plant, funeral home, homeless shelter, or cemetery High renter concentration Bad school If you don't plan to have children or are retiring, you may not care about the "bad school." If you're not bothered by noise, busy locations, or strip clubs, you may find a good deal. In addition, buying the "worst house on the best block" is a time-honored way to buy a home in an otherwise unaffordable neighborhood and face decreased competition. On the other hand, some say buying a bigger house in an up-and-coming neighborhood may be a better long-term investment with faster equity-building potential. If you're able to relocate, consider parts of the U.S. where homes are generally undervalued and still affordable despite strong regional fundamentals. According to the National Association of Realtors (NAR), many metro areas in the Southeast U.S. offer good value, including Dallas-Forth Worth, Texas; Huntsville, Alabama; and Spartanburg, South Carolina, among others - such as Tucson, Arizona. Verify my mortgage eligibility (Sep 30th, 2023) Choosing the Right Property Type Overall, single-family homes are typically among the more expensive options. You may need to investigate cheaper alternatives if location or another priority is more important to you, including condos, manufactured homes, or an older single-family home that needs serious repairs. Single-Family Homes Verify my mortgage eligibility (Sep 30th, 2023) Single-family homes are the more costly option but appreciate faster and have a greater diversity of types and locations, whether it’s a new, custom-built home in the suburbs or an older home closer to the city center. According to a recent NAR survey, many homebuyers consider previously owned homes to be a better overall value. Condominiums and Co-ops These smaller, apartment-like dwellings can be an affordable housing option, particularly for first-time homebuyers. There are differences between co-ops and condos, but both may come with extra fees, homeowners association dues or additional costs to cover unexpected expenses or repairs, which you'll need to budget for. Verify my mortgage eligibility (Sep 30th, 2023) Townhouses Townhouses are multilevel structures grouped together that often share one or more walls and may or may not come with monthly homeowners dues. While less expensive than single-family homes, townhouses may also have rules restricting interior changes. Manufactured Homes Verify my mortgage eligibility (Sep 30th, 2023) Manufactured homes are usually prefabricated elsewhere, then taken to the site. Manufactured homes may be less expensive, but also tend to depreciate over time. Multifamily Homes Multifamily homes, such as a duplex or small apartment building, offer a homebuyer the option of living in a part of the space while renting out the other side or area. Tenants will provide you with another form of income, but you'll have more responsibilities (and potentially, expenses) as a landlord. Verify my mortgage eligibility (Sep 30th, 2023) Some cities offer affordable housing and condo units for qualifying buyers. In San Diego, for example, condos might have pools, solar water heaters, and even fitness centers. However, plan ahead if you hope to buy - San Diego's interest list contains several hundred applicants for only a limited number of homes available annually. What Size Home Can You Afford? Consider balancing size with savings. Don't give up your savings plan for a big house, as you'll still need an emergency fund for unplanned repairs and replacements. But you'll want to ensure the home's layout suits your needs, both now and later. While children can share rooms or bathrooms for a while, it's important to consider how long you plan to stay in the house. If you're hoping to stay for at least 10 years, ensure there's enough room for everyone as they grow. Consider how flexible existing rooms are - can you repurpose a bedroom for an at-home office, for example, if you change jobs? Storage space in closets, garages, and other areas is recommended to be 10% to 25% of your home's total floor space. If you have a 1,500-square-foot home, that's 150 to 375 square feet. Verify my mortgage eligibility (Sep 30th, 2023) But don't forget that the larger the house, the more utility and maintenance expenses you may rack up, particularly if systems haven't been updated recently. Smaller homes can save you money on energy and maintenance. Smaller homes (less than 1,200 square feet) and two-bedroom homes have appreciated more rapidly than larger homes in recent years, but the market is also very competitive for these in-demand starter homes. Interior and Exterior Features Verify my mortgage eligibility (Sep 30th, 2023) A home's features and amenities may impact sales pricing and competition. A newly renovated home with an outdoor kitchen and updated bathroom may go for top dollar amid many offers. Meanwhile, the bungalow across the street with a shag-carpeted bathroom could be a steal, even in a desirable neighborhood. Go against the grain to find a good deal. Features that turn off some buyers, potentially leaving the home open to lower offers or less competition overall can include: Ugly or bold paint color versus white or neutral walls Carpeted rooms versus refinished hardwood floors White or black appliances versus stainless steel Dated bathroom and kitchen versus updated versions Other features that signal a home's age and may turn off buyers, according to agents surveyed, may include: Verify my mortgage eligibility (Sep 30th, 2023) Carpeted bathroom Popcorn ceilings Shag carpet Wood paneling Dated window treatments Many home buyers seek outdoor space to entertain friends and family, so keep an eye out for properties with potential but that currently lack a usable patio, pool, fire pit, or outdoor pizza oven. If a home still has an oil-based furnace, for instance, it may be less expensive right now, but eventually could cost more to heat, and you'll have to pay to convert to another heat source. While some outdated features are purely cosmetic and easy to fix, consider a home's overall energy efficiency and maintenance costs, particularly in light of rising energy prices. Verify my mortgage eligibility (Sep 30th, 2023) Home Condition and Expected Repairs "Fixer-uppers" can be one way to save money. A true fixer-upper usually presents a bargain asking price from a seller who’s happy to make concessions - but it may also not be a livable property until renovations are completed. Carefully and honestly consider your ability to put in "sweat equity" or the amount of money you'd need to invest in any repairs and renovations. Hopefully, a home inspection will reveal any serious, high-cost system or structural defects, such as a cracked foundation, shifting soil, bad wiring, broken sewer pipes, or flooding. The home's roofing and siding should be examined both for years left in them before replacement and overall maintenance cost and time. For example, wood panels or wood shake-shingle siding need regular painting or staining, while aluminum siding is virtually maintenance-free. Verify my mortgage eligibility (Sep 30th, 2023) Some building materials, such as lead and asbestos in older homes, are health hazards and can lead to expensive future remediation. Other environmental hazards such as radon, formaldehyde, mold, and insects can also lead to costly issues. Eighty-one percent of sellers make a concession during the home-sale process, according to the real estate site Zillow. Concessions could lower your final purchase price and make the house more affordable. Seller concessions often include lowering the sale price, including existing appliances, paying some or all closing costs, and providing a repair allowance. The Bottom Line Verify my mortgage eligibility (Sep 30th, 2023) It is possible to find an affordable home that fits your budget, but you may need to possess (or develop) patience, flexibility, and an open mind about your location, the house's features and amenities, and how much work you'll have to put into your new, affordable home. Frequently Asked Questions (FAQs) How do you find the value of a home? You can find the estimate of a home's value through online tools such as those from Zillow or Redfin, but keep in mind that these are just estimates. The actual appraised value and sale price may differ. The home's asking price may also be lower or higher than the final appraised value and sale price. Your agent should also be able to create a comparative market analysis for you as well. How do you find a foreclosed home for sale? An agent who specializes in foreclosures can help guide you through the purchase process and help you avoid problems. While a foreclosed home might be less expensive, it can also require extensive repairs or present challenges when price negotiations occur. Show me today's rates (Sep 30th, 2023) Robinson Mortgage Group, LLC. KY Click to Call or Text: (502) 432-1808 This entry has 0 replies Comments are closed.