The thought of buying a home can be a thrilling experience. But as you explore the homes in the community you want to move into, reality sets in that you won’t be able to afford the ideal home of your dreams. You may have to lower your expectations for a smaller square footage, less bathrooms, or a smaller yard. You may even have to have your kids share a bedroom.

While you may not be thrilled about giving up some major features in your wish list, there are other effective strategies for finding a good starter home. You can drive around town and locate up and coming communities where homeowners are performing extensive remodeling or renovating their landscaping. You can usually pick up a good home at a reasonable price. You can also search out the local artist communes. These areas tend to redevelop into a popular part of town.

One main advantage of buying a starter home is the ability to get into the real estate market and begin building equity. While a starter home may not possess every feature you want, it gives you the opportunity to build equity for a better house in the future. This technique is suitable for homebuyers who anticipate a rise in income in the future. While being able to save money can help you buy a better home, you can still use the equity from your starter home to move into a larger one. Despite the advantages of owning a starter home, there can be drawbacks you need to know about:

1) Puts A Strain On Your Budget – Buying a home can put a dent in your savings. Besides the initial down payment, you’ll incur additional costs such as: closing costs, appraisals, property inspections, agent commissions, and moving expenses.

If you think buying a smaller square footage home will solve your problems, think again. Just because a home is tiny doesn’t mean it’s going to be cheaper. Land costs can be expensive depending on which part of town you plan to buy into. This especially applies to nicer neighborhoods.

2) Pick A Mortgage With Money Saving Terms – It’s not uncommon for you to find loans charging you prepayment penalties and points. These fees can eat a good portion of your equity. If possible, shop for a home loan with no prepayment penalty or points.

3) Be Prepared For A Down Market – With today’s tough real estate market, be prepared for a possible drop in value over the next few years. This means you won’t have much equity and may have to sell your home for a loss. Be prepared for a potential loss or a tough time moving into a larger home.

Although there are downsides to buying a starter home, many homebuyers continue to use this technique to enter the real estate market. Owning a home can be a rewarding experience and buying a starter home is a good first step.

If you’re searching for the perfect starter home in Southern California, check out these local Anaheim Realtors and Anaheim Hills Realtors to help you find one.