Expert: Jessica Bryan - 1/5/2005

Question
Hi Jessica-

I am a first time home buyer. I have been looking at the real estate market and I want to buy some property near St. Petersburg, Florida. The market is hot right now. However, since I am a single male with no children, I am not interested in buying a single family home because its too much space for me, I dont want large mortgage payments, and yet I dont want to live with tenants.
I also do not want to buy a condo because it is like apartment living, I dont like paying association fees, and condos dont increase in value like single family homes do.

Instead, I thought of buying a duplex because I can rent the other unit out, I dont have to have tenants living with me, and duplexes are good investments. What do you think?
I am looking for a good investment but I dont have a lot of money to spend. I have excellent credit and have  a few thousand dollars saved in the bank. I work three part time jobs on call and make about $1,200 a month. I live in Largo, Florida..just outside St. Petersburg, FL.

Do you have any suggestions on buying property for the first time? Do I qualify for any free money such as bonds? Or FHA's? I really want to buy property...but I also dont want to pay for PMI. I hear horror stories about this. I'm cautious first time investor. Anything I should be aware of when buying for first time? I need some advice before I take the plunge.

Thanks, Todd

Answer
Dear Todd;
First of all, I would suggest that you go to a lender to see how much of a loan you qualify for and the type of loan it will be.  Don't be afraid of an adjustable rate loan since you are just starting out and won't be in your first home too long.  As for PMI, unless you have 20% of the purchase price you will be required to pay PMI however once you pay of that first 20% the PMI goes away.  I have found that some banks (if you are a customer of theirs)will make exceptions with the PMI.   If you have a long-standing relationship with a private bank you might get lucky and do a loan with them without PMI.  Once you know how much of a home you can afford I would suggest a duplex or a zero lot line patio home which is somewhat like a townhouse with the same kind of homeowners association but without attached walls.  There are also many townhomes these days that are either two or three units.  Try to find an end unit and something with a small yard.  It tends to feel more like a home.  The patio home usually has some small green space between homes and small front and back yards that are maintained by the HOA.

As for qualifying for "free money" there are some first time buyer incentives that are out there but it depends on the area and the property you are buying.  If you bought a duplex then part of it would be investment property and would put a different spin on the loan and any bonds, etc.  Again, your lender (if local) will know what your area is currently offering.  It varies from one state to another.  Since you are a first time buyer the next suggestion I would like to make is to find a good real estate agent who can be your Buyer's agent.  He or she will assist you with the purchase, check comps,property history and how resales are in the area, make sure that you get all of the inspections, check the restrictive covenants, and make sure you have all of the necessary disclosures. They will also arrange for an attorney, title search and make certain that there are no outstanding liens, debts or complications that could cause delay or stress to you. Buying a home is becoming a more complicated process. Realtors are required to take yearly update courses just to keep up with all of the changes.  In addition most of us take classes at least once a month to stay current on all of the new issues.  We can then offer exper advice and guidance; which in turn provides peace of mind to the client.

I hope that this helps you.

Good luck and best wishes.

Sincerely,
Jessica Bryan
Managing Broker
House to Home Realty Services