Buying a Home in Philadelphia: Complete Guide for First-Time Buyers
Buying a home in Philadelphia may seem hard. You might feel lost and even overwhelmed. Where could I even possibly start? Maybe you are a first-time buyer? How about finding a neighborhood to buy a home? What about relocation to a new city? In this article, we cover every aspect from start to finish, providing a guide to buying a home in Philadelphia.
Is Philadelphia a Good Place to Buy a Home?
Many factors go into knowing whether an area is a good place to buy. When it comes to Philadelphia, it has a large diversity. There is plenty of culture in each section of the city. You may also notice that you can get a different environment in each area. Such as smaller, more suburban-feeling areas with lots of woods and parks in areas like Roxborough and Chestnut Hill. If you wanted more city feel, you can live in one of the very compact areas, such as South Philly. Each area offers its own character. Plenty of areas, such as Fishtown, Northern Liberties, and Fairmount, have seen a large increase in values over the years.
Philadelphia has plenty of the nation’s best hospitals, such as CHOP (Children’s Hospital of Philadelphia), Jefferson, and Penn. Not only do people move from all over the country to work at these hospitals, but they also come here to get treatment. It is also known to be voted the most walkable city in America. Being a large city, it is also more affordable than its neighboring cities of New York and Washington D.C.
First Steps to Buying a Home in Philadelphia
Are you in the beginning stages and starting to shop around for a home to buy in Philly? If so, you are probably looking for more information on where to start. The first step in buying a home in Philadelphia is contact a mortgage lender. Therefore, you know your buying power for buying a Philadelphia home. Furthermore, your buying power is going to be how much you can afford. Once you know the amount you can spend, you can start looking.
Furthermore, when it comes to getting approved for a mortgage, there are two things lenders expect. A minimum credit score of 620. As well as a debt ratio of at least a 50% to 36% debt to 50%. You can not have more then 50% of your income in debt, or you will struggle to get a loan.
Philadelphia Home Prices by Neighborhood
- Fishtown: It is very expensive to buy a home in the Fishtown section of the city. It is an area that has seen plenty of growth over the past 5 years. The current price is between $365,000 and $489,000.
- Point Breeze: South Philly is made up of a lot of different neighborhoods. But Point Breeze is a very popular area as of recently. It is a very nice area that is cheaper than the other side of Broad Street in East Passyunk. The average home price is right around the low $300,000 price range.
- Roxborough: This has been one of the fastest-growing areas to buy a home in Philadelphia. People fall in love with its small-town feel. With also so close to the Wissahickon park trails. You are also less than 30 minutes away from Center City. The average home price here is $378,000 to $420,000.
- Oxford Circle: The northeast is a very big section of Philadelphia. But if you are looking for an area more affordable. That has plenty of resources and quick access. You may find yourself settling down in Oxford Circle. You can even find some single-family homes in this area. The average home prices are right around $220,000.
First-Time Homebuyer Programs in Philadelphia
The division of housing and community development offers a buyer’s assistant grant of up to $10,000 or 6% of the home price. This is a huge advantage if you are looking to buy a home for the first time and don’t have much to put down. You can use this for a down payment or even closing costs. Even if you have the money, still applying for this type of grant could help keep more money in your pocket.
There are also FHA loans you can apply for if you never purchased a home before. They are loans that allow you to buy a home for the first time with only 1% to 3% down payment. You can also apply for these loans with a lower credit score. Just be aware that you are responsible for PMI (private mortgage insurance). It is a certain amount extra you would pay a year directly to the lender. It is used as an assurance since the borrower is not bringing the full 20% to the closing table.
Property Taxes & Closing Costs in Philadelphia
There are always property taxes and closing costs associated with buying a home in Philadelphia. Depending on what time of the year you buy the home, you may be paying the full year of taxes on the property at closing. A title company will always pro-rate the yearly taxes. If you are buying at the beginning of the year, you will be paying the full year at closing. If you buy at the end of the year, it falls mainly on the seller.
You also need to be aware of the city transfer tax. When selling or buying a home in Philly. You are responsible to usually splitting the 4.578% transfer tax associated with the sale of a home. This can be negotiable and paid only by one side of the transaction. But if not specified, it would be split between buyer and seller. You can also get a more accurate number through a real estate agent or mortgage lender. That way, you have a better idea of how much you need to bring to the closing table.
What to Watch Out for When Buying in Philly
There are a few things to be aware of when buying a home in Philadelphia. Some people don’t know these things, especially if it’s their first time buying a house.
- Pay attention to the area you buy. There are certain things, such as buying near major roads. In Philadelphia, there’s a lot of undesirable roads with plenty of traffic. You also want to stay out of industrial areas. Philadelphia is home to plenty of factories and warehouses. Staying away could help if you decide to resell.
- Always get a home inspection. In Philadelphia majority of homes were built in the early 1900s. These houses are well over 100 years old. Even if the house has been fully remodeled, you still may find something wrong on a home inspection.
- Do your research! Each area in Philadelphia has its own charm. But not all areas are the same. Some can be a nightmare for parking. If you plan to do showings, do them in the late afternoon if possible. It will give you a good feel if you’re able to get parking. Some streets even offer permit parking. Which can be a huge bonus if you don’t have a driveway.
How Long Does It Take Buying a Home in Philadelphia?
If you are looking into buying a home in Philadelphia, then you need to give yourself some time. Depending on which area you are buying a home in. You may want to plan at least 3 months. Some market homes will sit on the market for less than 7 days. While others could sit up to 100 days or more. Talk with a local realtor even if you are on the fence about buying at this moment. They can give you a better time frame on when to start searching
The summer months can be really challenging. Especially spring leading up to summer. Plenty of people start their search when the weather starts to get warm in Philadelphia. If you plan to buy during the holidays, it could be an advantage. It could take less than 60 days to get you into a brand new home. Philadelphia is filled with plenty of inventory. Don’t panic because there will always be a new home that hits the market.
Work With a Philadelphia Buyer’s Agent
If you’re interested in buying a home in Philadelphia. Then the best place to start is contacting a local expert. You will need an agent to submit an offer on your behalf. They will also help tremendously in pointing you in the right direction of lenders. Most agents who have done sales in Philadelphia understand the market. Don’t look for an agent who is not comfortable or has little understanding of the city’s real estate market. Considering Philadelphia’s a much different market than the suburbs. Therefore, choose an agent born and raised in Philly with extensive real estate knowledge & experience. Furthermore, submit your info on the form below or give me a call at 215-509-9510.
