First-Time Homebuyers

Is Homeownership Right for You?

• Are you tired of your hard-earned money making your landlord wealthier instead of you?

• Does taking care of your housing needs while simultaneously building wealth sound appealing?

• Are you looking for a living space that you can freely customize and call your own?

• Are you looking for a way to passively build wealth or potentially earn side income?

If you answered yes to any of these questions, then homeownership is likely right for you! The key is to find the right strategy that aligns with your real estate goals. There are various strategies you can implement, but let’s take a look at some common ones:

Permanent Residence:

First-time homebuyers purchasing a home as their permanent residence typically plan to stay long-term. They carefully consider factors like the size of the home to accommodate household members and the location to best suit their needs. This option is particularly common among individuals who have established their careers or are settling with their families. While the intention is long-term, life changes can always lead to new opportunities so they can always sell and relocate as needed.

Starter home:

A starter home is ideal for buyers who aim to build equity and eventually upgrade to a larger property. This approach is especially suited to individuals or couples who may not yet have the resources to purchase their dream home but can afford a more modest property in the meantime. For example, a couple planning to start a family in the future might prioritize buying a starter home now as a stepping stone toward their long-term goals. 

Build Equity and Cash Out:

Purchasing a home as a short-term primary residence can be a strategic decision, especially in a hot housing market. This approach allows buyers to capitalize on potential market appreciation while building equity during their time in the property. For individuals who plan to stay in the area for at least two years, this option could be worth considering if they are comfortable taking on the associated risks. This strategy may provide a valuable opportunity to leverage market conditions, even without long-term residency plans. 

Convert to Investment:

For those interested in real estate investment, purchasing a home with the intention of converting it to a rental property can be a strategic move. The process often begins with buying a smaller, rental-friendly property and building equity over time. Once sufficient equity is established, the owner can purchase their next home to live in while using the first property as collateral for the new loan. Retaining ownership of the initial property allows them to generate rental income, which can help offset mortgage costs and grow a real estate portfolio.

This strategy can be scaled by repeating the process with additional properties. Alternatively, for those who prefer not to manage a separate property, renting out an extra room in their current home can be a simpler way to start generating rental income, making it a flexible option for those with a vacant space

How to Prepare

Start Saving Early

For many first-time homebuyers, the down payment and closing costs are among the most significant obstacles to purchasing a home. Depending on the loan type and the purchase price, these costs can range from a few thousand to tens of thousands of dollars. Fortunately, Wisconsin offers down payment assistance programs, and many lenders provide options to roll closing costs into the loan.

Curious about how much you should save or how much home you can afford? Let’s explore your options together. Schedule a meeting with me, and I’d be happy to guide you through the process and help make your homeownership goals achievable.

Boost Your Credit Score

Pay off your credit card balances, continue making all payments on time, and avoid opening any new lines of credit. Equally important, don’t close any existing credit card accounts, even if you’re not actively using them, as this can impact your credit history.

A strong credit score can lead to significantly lower mortgage rates, potentially saving you hundreds of dollars each month on your mortgage payment. Taking proactive steps to improve your credit can make a big difference in your home-buying budget