Buying a House in Philadelphia

If considering buying a house in Philadelphia. It’s vital to approach the home-buying process with preparation and guidance. Purchasing a house is a massive decision with much responsibility and potential risk. Additionally, owning property has advantages, from financial benefits to a sense of freedom.

It’s important to save for the down payment and work to improve your credit score. Furthermore, follow the steps within this article & guide to buy a home in Philadelphia successfully.

How Much Money Is Needed to Buy a House?

The cost of the house is the first thought that comes to mind. Wondering how much money is needed when buying a house in Philadelphia. Well, the down payment depends on one factor. Is it your first time purchasing property, or have you owned a home before?

If it’s your first time, these particular buyers qualify for a “first-time home buyer” loan, which only requires a 3% down payment on the purchase price. Furthermore, those who don’t qualify for the FHA loan typically need to come up with 20% of the sales price.

Additionally, another factor to consider is the monthly payment. The monthly payment depends on the interest rate on the loan, which has been floating around 7%.

Steps to Buying a House in Philadelphia PA

There are standard steps to buying a house in Philadelphia. Furthermore, following these steps and using the guidance of a real estate professional will minimize the risk of homeownership.

Step 1: When Buying a House in Philadelphia

Getting pre-approved for a loan.

• The first step in purchasing property, knowing your buying power and applying for a mortgage. Speak with a mortgage lender to understand your price range. Once the buyer knows what they can afford, they can begin narrowing down the search to certain criteria.
• The mortgage lender will request at least the last two years of W-2s or pay stubs. A recent credit report pulled within the last month, along with a credit score of at least 620. Furthermore, it’s vital to stay up to date with all credit card payments or anything that can negatively impact your score.

Step 2: Decide on the Area and Begin Your Search

Speak with a realtor. Interview multiple agents, determine which agent has the best plan, then sign a buyer agreement to work with that realtor.

• When choosing a section of Philadelphia to buy a house. Consider your lifestyle, wants, and needs. If you work in Center City Philly and prefer the city vibes, South Philadelphia is an excellent area. Most homes in South Philly are affordable. South Philly is a short distance from Center City, with the Broad Street subway line that provides an easy commute. If you prefer a slower, more laid-back lifestyle, consider areas like Roxborough. The northwest section of Philly, Roxborough, Manayunk, and Chestnut Hill, provides a suburban feel while still being a Philly resident.
• Determine the type of property. Some homebuyers have children, so factors they consider are the number of bedrooms, school ratings, and other property features like a backyard or basement.
• Knowing your price range and home criteria allows your agent to select several properties that may draw your interest.

Step 3: Submit Offer, Conduct Inspections, Close on Property

After narrowing down your home search to a few properties. The next step in buying a house in Philadelphia will be to view the homes. Furthermore, once a property is selected, follow this process to purchase the home.

• When you find the home of your dreams, feedback will be provided by the agent. The realtor will discuss any concerns with the home and what a fair number will be for the offer. The agent writes up the offer, including any special contract terms. If the seller approves the offer, advance to the next stage.
• Once the offer is accepted, it’ll be time for the inspection period. Usually, the inspections are completed within 5 days of the offer acceptance. An independent home inspector conducts their walkthrough, documenting any necessary repairs or issues. Both sides can either agree to an as-is sale, the seller may provide credit towards the renovations, or complete the repairs before closing day.
• Prepare for closing. A title company works to clear the title and verify all legal documents with the city. If there are any liens or utility bills owed, the title company will deduct that from the sales price. Most of the time, the title is cleared within a few weeks, and the lender is ready to close within a month of submitting the offer.

Advantages of Buying a House in Philadelphia

• Freedom: When owning a home, you can do what you want with your home. Furthermore, there’s no asking a landlord to change the color of the walls or have long-term guests staying at your place.
• Property Appreciation: Properties tend to increase in value over time. In Philadelphia, within the last decade, on average, properties appreciated by over 168%.
• Building Equity: While the property appreciates, the owner also pays down their mortgage. Essentially, building equity when the time comes to sell the home.
• Paying the same monthly payments: When renting a house, the rent can be increased every year when the lease gets renewed. Furthermore, owning a house, the monthly payments remain the same unless property taxes rise.
• The homeowner makes the decisions: As a property owner, you decide to stay or to sell the house. Furthermore, no landlord decides to move on from you as a renter or sell the property out of the blue.
• Potential for a rental property: At any time, the homeowner can decide to relocate and use the house as a rental property. Generating passive income and using home improvements as tax write-offs.

Disadvantages of Buying and Owning a House

• Owning a property, you’re responsible for the annual property tax and school tax.
• Responsible for house maintenance. As a homeowner, you must maintain the exterior of your home to avoid fines. Additionally, keep up with any issues to avoid expensive major repairs.
• Paying for property insurance. Another monthly expense when owning a home is the monthly insurance.
• Less flexibility to relocate. It takes time and resources to place a tenant in a rental or to sell a house. A homeowner can’t pick up and leave as easily as a renter.

Methods for Buying a House in Philadelphia

There are multiple routes to buying a house in Philadelphia. However, only one route is recommended because of the guidance and support provided. When buying a house, it’s vital to utilize an agent. A realtor can determine the value of the house based on recently sold comps. A comp is a home that recently sold with similar characteristics, square footage, and bedrooms/bathrooms.

The realtor is familiar with the local real estate market to provide advice and the ideal amount to offer. Agents are bound by a code of ethics, so your best interests are put first. Lastly, an agent can navigate an agreement of sale while negotiating the terms of the contract.

Another method to buy a house in Philly will be to take the For Sale By Owner route. This way can be risky because you don’t have the guidance of an agent to determine the value of the home. At times, when buyers go the FSBO route, they will hire a real estate attorney to review the sale agreement. Since lawyers charge a flat hourly rate compared to an agent’s 3-6% commission.

Is it Worth Buying a House in Philadelphia?

Yes, it’s certainly worth buying a house in Philadelphia, Pennsylvania. A beautiful city with a rich history and endless things to do. In most sections of Philly, the property values continue to increase, making it a desirable real estate market. When the time comes to purchase a house, save for your down payment, which consists between 3% to 20% of the sales price. In addition to saving for the down payment, improve your credit to decrease your interest rate.

When buying a house in Philly, hire a real estate agent to guide you through the process. The agent is familiar with the market, along with the potential growth for that neighborhood. The majority of the properties in Philadelphia are older, which can lead to more issues, so never waive the inspections.

Purchasing a house is a massive decision that can be risky if not approached correctly. Furthermore, it is important to follow the agent’s lead and be well prepared for the extensive home-buying process. Buying Property 215, here to help with buying a house. Feel free to submit your info below or call 215-359-6090.