When does it make sense to buy a starter home? Or when does it make sense to buy a home in general? When did you all buy a home, and what was your experience with home ownership?

My wife and I are in "get informed" mode right now, and are interested in what you all think.

I think the first key is financial stability - when I started my own business I knew I wouldn't be able to easily get a mortgage until after 2-3 years, so I set a goal of looking for property around this time period.

After 1 year, I started seriously looking at the property market, and started visiting places I'd consider living, as well as developments that I could potentially end up moving to.

Once I hit 24-36 months I was actively visiting property for sale, and because I'd already acquainted myself as best I could I felt like I was able to make an informed decision on buying.

So in those regards - financial stability, and a familiarity of the local markets in advance of making a purchasing decision.

Even still, I did end up making a few mistakes - always use and independent surveyor, pay more attention to mortgage fees as opposed to just mortgage interest rates, don't imagine that people employed in the property business have your own personal interests at heart, and also don;t be fooled into thinking that new build properties are less likely to have problems because it's not at all true, and additionally get a clear idea of what exactly is covered by building guarantees and for how long.

A few pointers.

I think a lot of people refer to their first home as a starter home because they hope to move on to a bigger home or another area later in the future.
I myself waited and when I went and bought it was with the intention of keeping the home that I ended up with. That way if I never sell I am happy with the one I purchased.

Good stuff, brian!

I'd add, from a financial perspective, and assuming you have a stable income, then it is really simple:

Take your net monthly income and multiply it by 20% to determine a "low value" and 30% to determine a "high value". For example, if you make $4000 net income monthly, your target mortgage payment should be from $800 to $1200.

Use these values as a monthly payment range. If you can buy the home and the mortgage fits within this range, then you can afford the mortgage. Stay closer to the 20% to play it safe.

Keep in mind, when going from an apartment to a home, you'll need to furnish it. As brian said, there may also be expenses for fix-up or upgrades.

Put the least amount down on the mortgage as possible, and keep the cash for these other expenses. Under no circumstances should you violate the 30% rule. If you want a bigger or more expensive home, then increase your income!

Begin working on improving your credit scores at least 12-24 months prior to applying for a mortgage. It takes time to research mistakes and get them corrected. This will hopefully yield you a better interest rate, and therefore maybe a larger home.

Lastly, get pre-approved for the loan PRIOR to looking for homes to buy. If you find the one you want, you need to be able to put in an offer that is going to stick. You also gain a benefit of having a fixed budget to deal with, which will help keep you out of trouble.

Agreed! Getting pre-approved, knowing my budget, and sticking to it, got me a good deal on a home some years ago. Also it helps to remember there are plenty of homes to choose from, and plenty of deals waiting for the right buyer to come along. Don't fall in love with any deal. It will cause you to break the rules.

I found a home we really liked in a new area we wanted to live in. The house was close to our max budget (25%), but had some unfinished things. It was supposed to be the model home but the area sold out so quickly they never finished the model. I wanted the deck built as planned, and A/C installed, the in-home vacuum system completed, sod for the yard, and so on. These were things the builder had hoped to avoid and sell it "as is". With the finishing I wanted, the builder wanted to charge me another 25K over my offer but I knew that would put me over my budget. We negotiated away the sod, but the rest I stuck to. His counter was still to high after two or three rounds so I told my Realtor to forget it. She was frantic, thinking she would lose the deal, but I told her we would keep looking for another place. A half hour after I pulled the plug, we heard from the builder's Realtor he would take the deal.

This is the most important point that I'd stick with, too.. in my own case, the financial stability was so vital before looking for a home to buy. In our case that meant getting credit cards paid off... not "down" but paid off and closed. I suspect many people don't do that, but it has saved us a lot of headaches even if we had to wait a little longer to buy a home.

The ideal starter home (in my opinion) is a duplex - you get to have a rental that pays 60-70% of the mortgage and you get the advantages of home ownership.

I agree with all of you, however you need to take more than just a budget approval strategy before walking in to your first home. You need to take the investors approach when finding a home wheather it be your 1st or 5th home. You need to find a Realtor (buyers agent) and Mortgage Broker that is market savvy (not money hungry), and will lead you in the right direction. Invest in areas especially that will grow your equity in your home over time so that you have a potential in upgrading as your family grows or tastes perhaps.

Well, we decided it would be smarter to save our pennies and just get a nice home for our first home as soon as we can afford it with one salary. Right now it makes more sense to us to rent on a month by month basis though.

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Never sign intellectual property agreements...

I also think you should be on the lookout for some deals that established communities will occasionally have.

When I lived in Fargo ND the city had a rather large area of old houses - like 80-100 years old - that were not "appealing" to young buyers because they were in need of some upkeep.

At the same time these were not bad houses - they were well built and in decent neighbor hoods - there were a lot of old Victorians, etc. I actually lived in this neighborhood and loved it.

The city decided to help first time home buyers get into this market. I don't remember the exact details but it was a pretty sweet deal. It went something like this: - if you bought a house in this neighborhood you got:

-Down payment assistance - something like $3000 in cash
-A low intereste renovation loan
-A lower overall interest rate (the city would buy points off your mortgage)

So, if you were willing to put in the sweat equity to upgrade the place (and that's a fantastic way to create equity anyway) it was a pretty sweet deal. Keep in mind these houses sold for around $110K so that $3000 in down payment was a good chunk of cash.