Costs of housing are increasing in Chattanooga, and is currently ranking seventh in the nation for fastest rising rent. In this city, it is becoming commonplace that it is cheaper to own than in the metro area. Depending on the home’s proximity to downtown, you can purchase a two or three bedroom home that has a lower mortgage payment than the average monthly rent. Purchasing a starter home is often a bridge first time home buyers use to build equity, and here are three house hunting tips to maximize your first time home purchase.
Take Advantage of Financing Options
As the job market improves with lenders slowly loosening their lending practices, a first time home buyer has several financing options for owning their first home. It is recommended that a new buyer is prequalified before starting their home search. This process can help narrow down your price range, and search for homes based on lending options. THDA and USDA loans are two types of loans that home buyers can use that require little to no downpayment. In this area, the average price for a starter home can range anywhere from $70,000 to $150,000. Over time, the value of a modest home increases, and homeowners use this equity to purchase a larger home. Here are two tips any first time buyer can use during their house hunting process.
|Before and after photos of stripping wallpaper, a process that cost less than $150!|
|Photo credits: That 70's House|
Choose a Home with Potential
When choosing a home, many buyers rank location at the top of their list. However, many homes in excellent locations will stay on the market because of a dated appearance. Many issues with the homes datedness are cosmetic, and usually don’t interfere the lending requirements of FHA, THDA or USDA mortgages. The upgrades are often cheap fixes, like dated wallpaper or hardware in the bathrooms in kitchens. Also, these homes will yield a much higher resale value if it is renovated, especially with a newer kitchen and bathroom. Many of these updates can be made over time if you desire, and can be a great strategy for a first time buyer wishing to build equity in their first home.
|1618 S Seminole Dr|
This starter home was built in 1953, but is complete with a newer heat & air system, water heater, and updated bathrooms
Look for Specific Upgrades and Features
One variable a first time buyer should keep in mind is maintenance. Do not let the terms “move in ready” and “recently updated” confuse you. Move in ready often pertains to a home that does not require any repairs to the structure of the house before taking out a loan. Recently updated is a looser term that can refer to either structural or cosmetic upgrades. A new study shows that newer homes are cheaper to maintain over time. However, older homes in Chattanooga’s metro area can be just as inexpensive to maintain if they have undergone structural repairs that can easily set back a newer homeowner. Some notable features to look for in a starter home are a newer roof, HVAC unit, and water heater—especially if they were installed within the past five years. Also, look for homes with unfinished basements and bonus space. Building equity takes time; families and homeowners’ needs often change during this period, and the extra space is customizable.