Category Archives: Home and Family

How Can First Time Buyers Decide Whats Best for Them

When you decide to purchase your first home, you may have visions of granite countertops and a luxury spa shower in mind.

And depending on your budget and your local real estate market, your vision just may come true. For many first-time homebuyers, however, getting all of the bells and whistles in that first home may not be feasible or practical. But a starter home can still be the perfect home for right now — and get you on a solid path to your forever home.

Understand Your Budget

The first step on the road to homeownership is determining how much house you can afford and that goes hand in hand with location as prime or popular neighborhoods may be out of your budget. So, it’s important for first-time buyers to understand all of the costs that go into buying a home and paying for it every month.

“Each buyer’s unique financial situation plays a significant role in which kind of home they purchase, especially in how much they can put down,” says Ray Rodriguez, regional mortgage sales manager at TD Bank.

For many first-time homebuyers, getting all of the bells and whistles in that first home may not be feasible or practical. But a starter home can still be the perfect home for right now — and get you on a solid path to your forever home.He adds that starter homes typically have a lower home price value, meaning your down payment will likely be lower than that of a forever home.

Morgan Franklin, a Realtor at United Real Estate Lexington in Lexington, Ky., concurs.

“The largest obstacle is the down payment. The larger your down payment, the more favorable your financing terms will be. Often, first-time buyers have a minimal down payment, which means that they will carry mortgage insurance (MI), which can have a huge impact on their mortgage payment.”

Franklin says he advises clients to find a starter home on which they can put 5 percent down, allowing them to use conventional financing instead of FHA loans, which are more common with down payments of less than 5 percent. “They’ll still have mortgage insurance, but conventional MI is significantly less than FHA MIP.”

Want to Move Up?

Franklin offers several criteria for buyers who know they’ll want to move up into a larger home in the future. He advises looking for a home in which:

  • The volume of sales in the neighborhood is steady.
  • There is a track record of appreciation in the neighborhood.
  • The school district has a high rating.
  • The home is not the most expensive in the neighborhood.

“Purchasing a starter home in a growing market where home values are continuing to increase is a smart move,” agrees Rodriguez. “If the value of your home increases over time, you can profit from your starter home when it comes time to move up and put those extra dollars toward purchasing your forever home.”

Being aware of potential family needs is important when buying your first home. For example, keeping area schools in mind is important whether you plan to have children or not because owning a home in a good school district increases the resale potential.

Tips for Selecting Options and Upgrades from Your Builder

Now that you’ve signed a contract to purchase your new home, how do you customize it to make it your own?

One of the advantages of purchasing a new home is the opportunity to select features and finishes that reflect your own personal tastes and lifestyle. But for many homebuyers, particularly first timers, the array of choices can be dizzying. 

Cabinets, countertops, flooring, fixtures, appliances — and even structural changes such as additional bathrooms or garages — are just the beginning of a potentially endless choice of options or upgrades that your builder may allow you to select.

So what’s a buyer to do?

1. Structural Changes

Select structural additions or changes when you sign the contract, or immediately thereafter. “Buyers are a little overwhelmed when they sign the contract because of all the legal documents,” says Sue Goodrich, vice president of sales and marketing for Cachet Homes in Scottsdale, Ariz. “The only thing we talk about then is structural options.”

Buyers who want to add rooms or garages, move doors or add a fireplace or recessed lighting, for example, need to make their structural changes early in the process because those changes may impact the building permit pulled by the builder. These types of changes — as well as any electrical or plumbing changes that would require walls to be opened — would also be costly to make after the home is completed. 

2. Post-Purchase Upgrades

Remember that it might make sense to make certain changes after you purchase your home. Cosmetic features in particular, such as paint, landscaping, lighting and plumbing fixtures, epoxy garage flooring, crown molding, chair rails, window treatments and even certain appliance upgrades can often be made after the closing, particularly by homeowners who have a budget.

Grenadier Homes in Dallas, for example, doesn’t include refrigerators in the base price of their homes, says Kathy Costa, a Grenadier Homes design consultant. That way buyers might be able to get a good deal on their own. Still, by purchasing these upgrades through the builder, you might be able to roll the cost into your mortgage, as opposed to paying out of pocket.

In addition, upgrades completed after the closing will not be covered by the builder’s home warranty — and may void it, Costa warns.

And, of course, there is the hassle factor as well: are you willing to spend time after the closing to work on your home — or would you rather move in knowing that your home is exactly the way you want it to be? 

3. Builder Timeline

Follow your builder’s timeline to select other options or upgrades. About two to three weeks after the contract is signed and approved, your builder will arrange a meeting at its design center. Depending on the builder, you may or may not be able to make changes after this meeting, so be prepared with a list of the items you want. Consider bringing photos of kitchens and baths you like to help guide the designer. 

Which is Right for You

Is a newly built home right for you? 

Do you want a home that you’ve helped design and that offers the latest in energy efficiency and design?

Or a previously owned home that may need fix-ups, paint jobs, and walls moved around to create the types of open spaces that make sense today?

These are baseline questions that confront many home shoppers early in the process. Your own answers are likely to depend on your lifestyle preferences, financing needs and the priorities you put on features like high energy efficiency, functional arrangements of interior living spaces and your desire, budget and aptitude when it comes to repairs and capital improvements.

There are a number of reasons you might prefer a resale house, even if it needs work. For instance, you may have your heart set on moving to a specific neighborhood in the city or a close-in suburb, where newly constructed houses are rare or not available unless you buy an existing home, tear it down, and build a new home on the lot. Or you may be a do-it-yourself aficionado and relish the opportunity to take an old house and transform it, even if that takes considerable time and money.

So it’s understandable that some buyers prefer an existing house in an older neighborhood. But have you seriously considered the potential advantages of buying new? Here’s a quick overview of some of the important pluses of new homes to think about:

Energy Consumption/Green Building

If you care about “green” — whether that means the money you spend on energy bills every month or your concern about the environment — a newly constructed home is virtually always the better option. Homes built today must meet far tougher national code standards for energy efficiency than just a few years back. Most newly built homes, in fact, come with energy certifications covering walls, roofs, windows, doors and even appliance packages. Virtually no resale homes offer certifications because they were built to much lower standards — often decades ago, when energy usage was an afterthought.

You can retrofit many elements of an existing house to improve its energy efficiency, but it’s costly. Even then, because of design shortcomings, you may not be able to achieve the level of efficiency that is now routine with a newly constructed home. In addition, new homes typically offer better air filtration which increases indoor air quality, reducing symptoms from those who have asthma or allergies.

Flexibility for Space and Wiring Customization

When you buy a resale house, you get what’s already there. That may include room layouts, ceiling heights and lighting that may have made sense in the1950s or earlier — formal dining rooms, small kitchens, fewer bathrooms and windows, and the like. With a new home, by comparison, you can often participate in the design of interior spaces with the builder, in advance of actual construction. Plus many new homes come with the sophisticated wiring that’s needed for high-speed electronics and communication equipment, entertainment centers and security systems. With an older home, you may have to spend substantial sums of money to take down walls where that’s possible — some are so-called load-bearing walls that are not easily moved — to enlarge rooms in order to create the flowing, more open living space that is preferred today.

Starter Homes May Be Answer for Millennials

For a lot of young people who are starting out, renting an apartment has been the norm and has made sense financially.

However, with rising rent costs all over the country, the tide is turning for Millennials who would rather put that money toward a home payment and build some equity.

“The rent for an apartment comes out to be the same as paying on a mortgage,” says AJ Saleem, who recently closed on a newly built home near Sugar Land, Texas, just outside of Houston, with his fiancé Sofia.

Saleem says a new home gave him and Sofia the design and architecture they desired.

“New homes definitely have a contemporary and modern look and feel to them. Some of them are already pre-wired for home automation. My app on my iPad can control every part of the house,” Saleem says.

Many Millennials — young people from the ages of 18-34 — are facing a failure to launch; that is they are having a difficult time starting out their lives and achieving the American dream. Despite being the largest labor force, according to a new study by the Pew Research Center that was done in the last quarter of 2015, good jobs with good salaries are still hard to come by for the majority of young people.

When you mix these two things with crippling student loan debt and a rise in cost of living, you get a generation that is downsizing in all areas of their lives, most important when it comes to buying their first home.

Despite many news headlines that purport that most young people are moving back into their childhood homes and are afraid to commit to decades-long mortgages, the opposite is true. A recent survey by TD Bank found that two-thirds of Millennials say they think they will purchase a home in the next two years. Being able to afford a home is still something that’s keeping many Millennials from purchasing, along with bidding competition.

But, the dream of homeownership is now possible due in large part to newly constructed starter homes that come with affordable price tags.

According to a recent article by Prashant Gopal for Bloomberg Business, newly constructed starter homes are coming back in a big way and major builders like D.R. Horton, Tri Pointe Homes and Meritage Homes are building communities designed for Millennial first-time buyers. This is a smart move because Millennials now account for 36 percent of U.S. home purchases, according to data collected by the National Association of Home Builders.

The New Home Source Interview

The condo is part of the Four Seasons Private Residences, a 12-story, 59-unit project being built adjacent to Beverly Hills. Condos are priced from $2.5 million to $3.8 million, townhomes from $4 million to $7 million and tower units from $5.9 million to $17 million.

The developer, Genton Property Group in West Hollywood, Calif., broke ground in October 2015 and expects to open in 2017. The developer is not new to the luxe market. The company has completed nine major projects, including creative office and adaptive reuse, multifamily development and urban infill, and retail in Culver City, Calif.; Lathrop (south of Stockton), Calif.; Los Angeles; Sacramento, Calif.; and San Diego, Calif., and Las Vegas. Five more projects, including the Four Seasons Private Residences and all in the Greater Los Angeles area, are in the works.

New Home Source asked CEO Jonathan Genton about the project and about luxury in Los Angeles. Here’s an excerpt, edited for length and clarity. 

NHS: What’s special about Four Seasons Private Residences?

JG: It’s branded Four Seasons, but it’s not affiliated with or attached to a hotel. Its intent is to offer a higher level of service and amenities and a finer quality of property than you would find in a typical condo on top of a hotel or in it somewhere.

NHS: What services will the property offer?

JG:The level of service would mirror that of a private hotel, starting with the arrival. You come in, you have your valet, 24-hour concierge and general manager, just like you would in a hotel. You have a private chef experience, private theater experience. It’s not a white-glove, silver-dome experience, but a high-luxury experience with significant staffing.

NHS: What about technology?

JG:Our customer has money and awareness of and typically likes technology. I’m designing today for what isn’t even on the market yet. I’m designing for things that will be introduced in 90 or 120 days. I’m going to hold on to that last-minute decision as long as I can.

NHS: Tell us about the special elevator service.

JG: Typically with penthouses, you have a lock-off elevator that just takes you to the penthouse. We all like going in the elevator and seeing the “PH” on the button. The idea of a private arrival experience is of value and appreciated by everybody, so the units in our tower are all truly private elevator. It sounds easy, but it’s terribly expensive. It’s called “destination-dispatched elevator,” which is a term used by elevator companies to say, if you parked in the garage and you’re in the elevator coming up to your unit and I am in the lobby, that elevator will not stop and pick me up. It will only allow you and your guests in the elevator.

NHS: What surprised you while you were researching what people want in this market?

JG: People wanted to self-park. L.A. is a car culture. People talk a lot about their cars. They didn’t want to hand their keys to a valet. They wanted to park their car, but they wanted it to be in a garage. We adapted that by making private garages within our subterranean garage.