Much attention is paid to first time Boston condo buyers, but our Boston real estate team is here to serve anyone who is looking for a home in this market. So I’d like to dedicate this blog post to those who have purchased a home before, whether in Charles River Park or Boston’s Beacon Hill or somewhere else, and are wondering what to expect the second — or third, fourth or fifth — time around. If you haven’t bought a home in a long time, this post is for you.
Conditions may have changed drastically since you bought your last Boston downtown condo, both in terms of how the market behaves (multiple offers) and how people are looking at homes, nearly 100% online with supplemental drone videos, video walk throughs, and 3D tours. Depending on how long it’s been since you owned a home, you may even be considered a first time home buyer again by certain financial institutions. Let’s take a closer look.
Can you be a first time home buyer twice?
Yes. If you purchased your first home with a spouse, and are now doing it alone, you may be considered a first-time home buyer again by the Federal Housing Administration, which administers Freddie Mac and Fannie Mae home loans. Ditto if you’ve owned a mobile home not permanently attached to a foundation.
If it’s been more than three years since you’ve owned your principal residence, you may be considered a first time home buyer by the FHA — again! It doesn’t matter how many Boston midtown condos you’ve owned in the past, or if the last home you owned was sold or foreclosed on.
Everyone’s circumstances are different. Before you start looking for a Boston West End condo it’s a good idea to talk to a mortgage adviser about what kind of loans you might qualify for. Although we usually think of first-time home buyers as being the ones most eligible for special programs, there are special repeat homebuyer programs as well.
Transitioning into your second home
Financial maneuvering may be necessary for second time home buyers because getting from your fist home to your second (or your second to your third) home can be tricky. A home is most people’s primary investment and they may not have an extra 20% down payment sitting around. Mortgage companies will not let most homeowners finance their second home while they still have a mortgage on their first, it can make their debt to income ratio too high.
The money to transition usually comes from selling a primary home and using the funds to buy the next home. Good news! You do not have to sell your home and rent an apartment before buying the next place. Real estate agents have ways to seamlessly move you from one property to the next. The primary method of doing so is NOT simultaneous closings (your home closes and the home your buying closes on the same day). That is a very stressful situation and too many things can go wrong. The primary method of transition is to sell your current home and then rent back from the new owners (typically for up to 60 days) while you find and close on your next place. Since the average time to close in Boston right now is about 45 days, that means your Boston real estate agent can potentially get you 3.5 months from the time you accept an offer on your home until you have to move out of it. Plus, after 45 days or so, you’ll have the funds! So you can look in earnest as soon as you accept an offer on your current home and then time it so that it closes in the next few months. This method also gives you (potentially) weeks to leisurely move from one home to the next.
“Needs” vs “Wants”
Real estate experts describe second-time home buyers as having “wants” for the new home, in addition to the “needs” they started off with when they purchased their first home. First-time home buyers tend to look for the basics — price point, bedrooms, square footage. Second-time home buyers have a better idea of not only what basics they need in a home, but also what they want in order to live comfortably. Maybe it’s a backyard for the dog, maybe it’s a basement for their noisy teenager, maybe it is a hobby room.
Getting to know your Boston real estate agent is key. We can help you navigate the complicated process of selling your old home while you search for a new one. Whether you’re a first, second, third, or tenth time home buyer, only work with the best! Contact us today.