Buying your First Home? Here are some strategic tips!
Buying your first home is a big, exciting step and a major milestone that has the power to improve your life. As a first-time homebuyer, it's a dream you can make come true, but there are some hurdles you'll need to overcome in today’s housing market – specifically the limited supply of homes for sale and ongoing affordability challenges.
So, if you're ready, willing, and able to buy your first home, here are three tips to help you turn your dream into a reality.
Save Money with First-Time Homebuyer Programs
Paying the initial costs of homeownership, like your down payment and closing costs, can feel a bit daunting. But there are many assistance programs for first-time homebuyers that can help you get a loan with little or no money upfront. According to Bankrate:
“. . . you might qualify for a first-time homebuyer loan or assistance. First-time buyer loans typically have more flexible requirements, such as a lower down payment and credit score. Many help buyers with closing costs and the down payment through grants and low-interest loans.”
Popular Philadelphia Grants and Programs include:
1) Revitalizing Neighborhoods and Increasing Homeownership program - The Pennsylvania Housing Finance Agency's new pilot program will feature the K-Flex loan product paired with other PHFA loan products – to provide funds for needed home improvements. K-Flex has a 30-year fixed rate, to keep the loan's monthly payment lower. The qualifying income limit for participation in the new RNIH program is $196,200 and the purchase price limit is $659,000. RNIH applicants must be first-time homebuyers, live in Philadelphia County and purchase a home there. Borrowers must make a minimum contribution from their own funds that is the lesser of $1,000 or 1% of the loan amount. Their liquid assets must be no greater than $50,000. This product is aimed at middle-income earners and qualified buyers can receive grants of $25,000 for application to the closing costs.
2) Philly First
The Philly First program offers an assistance grant of up to $10,000 (or 6% of the home’s purchase price, whichever is lower) to assist first-time homebuyers reduce the principal, cover down payment and loan closing costs. This program is available to first time home buyers and/or buyers who have not owned a home for at least 3 years. You will also be required to complete a City-funded home ownership counseling program before you have an executed agreement of sale; meaning a contract signed by both seller and buyer.
3) First Front Door Program
THE 2024 FIRST FRONT DOOR PROGRAM FUNDING ROUND WILL OPEN ON APRIL 16.
The Philadelphia Credit Union offers a first-time home buyer grant program funded by FHLBank of Pittsburgh. You will need to contribute a minimum of $1,500 and be a qualified buyer to receive a grant up to $15,000.
If you would like to talk about any of these options, please feel free to contact me!
Expand Your Options by Looking at Condos and Townhomes
Right now, homes are hard to come by and competition is very high. The law of supply and demand dictates therefore that home prices go up, making affordability tight for buyers. One way to circumvent this is to consider condos and townhomes. Realtor.com explains:
“For many newbies, it might just be a matter of making a shift toward something they can better afford—like a condo or townhome. These lower-cost homes have historically been a stepping stone for buyers looking for a less expensive alternative to a single-family home.”
Condos are often more affordable because they’re often smaller. However, they still give you the chance to get your foot in the door and achieve your goal of owning a home and building equity. And that equity can help fuel your move into a larger home later on if you decide you need something bigger in the future. Hannah Jones, Senior Economic Analyst at Realtor.com, says:
“Condos can help prospective homebuyers who perhaps have a smaller budget, but who are really determined to get a foothold in the market and start to accumulate some equity. It can be a really great entry point.”
Consider Pooling Your Resources To Buy a Multi-Generational Home
Another way to break into the market is by purchasing a home with friends or loved ones. That way you can split the cost of things like the mortgage and bills, to make it easier to afford a home. According to Money.com:
“Buying a home with another person has some obvious advantages in the mortgage department. With two incomes in the mix, buyers can likely qualify for a larger mortgage — a big help in today’s high-cost market.”
Bottom Line
By exploring first-time homebuyer assistance, condos, townhomes, and multi-generational living, it can be easier to find and buy your first home. When you’re ready, let’s connect.