how to own a home in Scottsdale on a first time buyer budget

Are you dreaming of owning your first home in beautiful Scottsdale? You're not alone! Buying a home can be an exciting and rewarding journey, and we're here to help make it easy for you. In this guide, we'll walk you through the steps to becoming a homeowner on a first-time buyer's budget. It can be done!

It's really tough for first-time homebuyers right now with such high prices, high interest rates, and low inventory in Scottsdale real estate. This reality is in all of Phoenix and its suburbs, and most of the nation. In fact, I figured I wouldn't be working with many, if any, first-time buyers again, especially in Scottsdale.

The good news is that I am getting a lot of first-time buyers registering and searching on my website. The bad news is that they're just searching and not ready to get pre-approved and start looking at properties. They're not sure they can qualify for a mortgage and many are currently stuck in a lease. Following are steps that will hopefully help you if you're a first-time home buyer that would love to be able to make a purchase but you're not sure if it's possible right now.

Set Clear Goals

Before you start your home-buying adventure, take a moment to define your goals. What type of home are you looking for? Consider your budget, preferred location, and essential features. Knowing what you want will make the process smoother. With that said, be ready to make compromises, as explained below.

Let's start by figuring out what you really want in your dream home. Take a moment to picture it in your mind. Do you want a Scottsdale condo or townhouse with less maintenance or a single-family house? How about the location? Think about the neighborhood that suits your lifestyle and the features that are essential for you. Knowing exactly what you're looking for will make the entire process much smoother. This is just a starting point, and as you continue reading you will see that you might have to be flexible and compromise.

Establish a Budget

calculator with budget on it to help figure out a purchase of Scottsdale real estate

Determining your budget is a crucial step. Calculate your monthly income, expenses, and savings. This will give you an idea of how much you can comfortably afford for your monthly mortgage payments. Remember to include additional costs like property taxes and insurance. You are trying to figure out your Home Buying Power.

You can play around with different price and interest-rate scenarios using our mortgage calculator. But the best way to know exactly what you can afford is to contact a loan officer. I have some great lenders I can refer you to. You can get pre-qualified quickly without any obligation.

I've had buyers looking at much higher prices than what they were eventually pre-qualified for. It's a real let-down when you've been searching for homes, viewing the photos, attending open houses, and falling in love only to find out you're not in that price range right now. Even if you get pre-qualified now you aren't stuck using that lender, so you really have nothing to lose, but you'll gain important knowledge of what you should be looking at.

We want to make sure you find a home that fits your budget like a glove. Maybe you don't want that tight of a fit. But you at least need to find out the highest you can qualify for and start your home search in the lower price range to see if there is something that would work for you.

Explore Financing Options

There are several financing options available for first-time buyers. Research different loan programs, such as FHA loans or VA loans if applicable, that offer favorable terms and down payment assistance. Speaking with mortgage lenders will help you to understand the options that best suit your financial situation.

Adjustable rate mortgages (ARMs) are becoming popular again. A mantra with the current real estate market is "marry the mortgage, date the rate". I remember my yearning to get out of renting and buy my first house. If that is you, find a place that you can qualify for and you can always refinance when rates drop. But this is how you can get in the door.

Did you know you can ask the seller to contribute to your closing costs? Some will say no and some will say yes depending on your offer. Or you can ask a seller to buy down points that will give you a lower rate, although it's usually only temporary.

Save for a Down Payment

Saving for a down payment is a significant part of the home-buying process. Set up a savings plan and look for ways to cut back on expenses. Consider automatic transfers to a dedicated savings account to ensure steady progress toward your down payment goal. Saving up for it might feel like a challenge, but we've got your back.

Do you know there are loans that only require 1% down (you must qualify). Your lender will explain all options to you. You can get a gift from your parents. If you're getting married, a new trend is setting up a home registry and asking for funds towards a down payment. I'm not sure how I feel about that but I'm sure some people are doing it.

parents are allowed to give you a gift of money towards your down payment for a home in Scottsdale

Your lender can let you know if there are current first-time homebuyer grants or programs available. When the real estate market slows down, alternate financing and mortgage programs start popping up to try to reignite home buying and selling.

Get Pre-Approved

Time to get that pre-approval stamp! Getting pre-approved for a mortgage is like unlocking a secret door to home-buying success. It can give you an advantage when house hunting. It shows sellers that you are a serious buyer and gives you a clear idea of your purchasing power. Gather the necessary documents and speak with lenders to begin the pre-approval process.

This is not the same as a quick pre-qualification. Being pre-approved means that the lender has verified everything (finances, employment and income, etc.) and all they are waiting for is an accepted contract for the place you want to buy. It's really the closest thing to being a cash buyer, although whenever you have a mortgage, an appraisal will be required.

Getting fully pre-approved means once the house appraises, you'll be ready to close. This can really expedite things once you have an accepted contract and could ensure a quick closing with fewer surprises.

Be Ready to Compromise

You might have to compromise on your first home in Scottsdale

You might have it in your head that you can afford a specific amount so you start looking at properties at that price point. You might even inch up a bit hoping to get a seller to go down or reduce at some point. But once you get pre-approved, you unhappily find out that your price range has to be lower in order to qualify for a mortgage.

Some buyers get upset and continue to rent, hoping prices and/or interest rates will go lower. But that's usually not the best option. Do you love renting? Are you that happy in your apartment or other rental property? Do you really want to keep throwing your money away on rent?

Are you renting a place that doesn't allow pets and you'd love to have a cat, dog, bird, etc? You can specifically search for attached properties that allow pets. When we purchased a townhouse in Scottsdale it was a requirement that pets were allowed since we had two small dogs. It can get tricky if you have more than two dogs and many attached property HOAs have weight limits, so you need to do a little homework. I do that for my clients that have pets.

If you still long to own your own home, be it a condo, townhouse, duplex, single-family home, etc., it's better to start somewhere than to wait. In popular areas like Scottsdale and Phoenix and other nearby towns, property appreciation is still happening. It will be in single digits vs double digits like in the prior Seller's Market. But renting gives you zero equity and no tax benefits.

Do you have your heart set on a single-family home but can only qualify for a condominium that isn't much better than your current rental apartment? The good news is that you can make that condo your own (but be sure to follow HOA rules). You can paint the interior whatever colors your want, change the flooring, and do other interior changes and updates. Other good news is that attached properties increase in value at a similar rate as single-family homes in the Scottsdale and Phoenix area. That isn't always the case in other states and areas.

Did you really want to live in Scottsdale but you just can't afford to? Then you might have to start looking at other suburbs that are more affordable. This would be the same if you have a school district in mind but can't afford to live in that area. You have to understand that your first house might not be your dream home.

My first house was vacant and I don't think it had been cleaned in a long time. We moved out of our apartment and straight into the house on the last day of our lease. We had a friend guard our U-haul open trailer in front of the house while we were closing on it. I didn't even want to sleep there because it was so dirty.

It had 3 bedrooms vs the 2 in our apartment, although the apartment bedrooms were larger. The apartment was more updated than the home we bought. But I hated renting and we turned that filthy little house into a super cute house that actually caused people's jaws to drop when they stepped inside. It looked like a little red schoolhouse on the outside until we finally painted it prior to selling, so people weren't expecting what we created inside.

We more than doubled the price when we sold it. In fact, trying to sell that cute little starter home is what got me into getting my real estate license. I'll have to write about that one of these days. It really opened my eyes.

We used the equity from the sale of our starter home to purchase a much larger home, and we have done that many times. When I went through a divorce I started over with a small house. But I wasn't going to ever rent again! I met my current husband and we upgraded on that 2nd starter home a couple of times until we ended up in our current home. At some point, we'll be downsizing this one. We wouldn't have gotten to where we are today if I had turned down that tiny starter home and continued renting.

My two starter homes weren't anywhere near my dream home. They weren't located in my first choice area (nor my 2nd, 3rd, etc.). My second starter home after a divorce was the smallest house I had ever lived in. But I also more than doubled the cost of that one when I sold it. I hope these true stories help you with the realization that your first-time starter home will be a stepping home to get as close to your dream home as possible - down the road.

Find a Knowledgeable Real Estate Agent

A friendly and knowledgeable real estate agent is your ally in the home-buying process. They can help you navigate the market, find suitable properties within your budget, and negotiate on your behalf. They know the ins and outs of the market, and they'll be there to support you every step of the way.

I have been licensed for 40 years and I've been in every kind of market and have learned how to adjust to changes. I will provide education to you so you can make the best decisions possible with what will probably be the largest financial investment you've made yet. I try to make househunting as fun as possible, and I will give you my honest opinion on the different homes we'll be seeing.

Begin House Hunting

Young couple viewing a Scottsdale home for sale

Get ready to explore! Armed with your budget and pre-approval, it's time to dive into the exciting world of house hunting. We'll work closely to provide you with the latest listings that fit your criteria. Remember, finding your dream home may take a little time, so be patient. The perfect place is out there waiting for you!

This should be the fun part. You'll get to see different homes and styles in your price range, and see how people decorate. You'll become a pro at knowing which homes are priced correctly for their condition. You'll start to learn what is most important to you and what you're willing to give up (if you find a place that shows best for the price but might not have everything you wanted).

Most of my funniest and/or weirdest stories are when I was working with buyers. Like the rusted chassis of an old sports car hidden behind doors in a corner of a basement (you could smell the rust and I have no idea how they were going to get it out). Or the time when a homeowner was running an unlicensed senior lady nursing home. There was the "turtle house" with a sunroom with big buckets and aquariums filled with turtles accompanied by cages of parrots. I showed a house once that I was told no one would be home and I jumped when I entered the kitchen and heard a loud "Hello!" - another parrot. Or another time I jumped walking into a room with a huge cage occupied by a huge but chill mastiff. No one mentioned that when I set the appointment. I could write a book!

Make an Offer and Negotiate

Once you've found a home that checks all the boxes, work with your agent (hopefully me) to craft a competitive offer. I will guide you through negotiations with the seller, ensuring your interests are represented. Don't be afraid to ask questions and seek advice from me.

Some questions are best answered by your loan officer, but I will handle the contract, negotiations, and contingencies. I will work and keep up communication with you, your lender, title company, inspector(s), and the listing agent. I have held transactions together when the agent on the other end went silent.

Complete the Home Inspection

A drone inspecting the roof of a Scottsdale home for sale

Before sealing the deal, we want to make sure everything is in tip-top shape. That's where the home inspection comes in. We'll help you hire a professional inspector who will thoroughly examine the property for any potential issues. It's all about giving you peace of mind and making sure you have all the information you need to make an informed decision.

We're once again in a market where not only can you have a home inspection done, but the seller might be willing to make repairs. That option was basically removed in our past crazy Seller's Market. We have some great home inspectors we'll share with you.

Close the Deal and Celebrate

Happy Scottsdale home buyers

Congratulations! You've reached the final step—closing the deal. Work closely with your agent and mortgage lender to ensure a smooth process. Once all the paperwork is complete, it's time to celebrate becoming a homeowner. No more making your landlord rich!

Remember, the journey to homeownership may have its challenges, but with proper planning, guidance, and a positive attitude, you'll be well on your way to achieving your dreams. Enjoy the process, and welcome to your new home in Scottsdale!

Posted by Judy Orr on
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