The economy is improving, interest rates are low, and many people are ready to become a first-time home buyer
The economy is improving, interest rates are low, and many consumers now find themselves in a great position financially to become a first-time home buyer. There’s a small problem though – the booming real estate market is resulting in rising home prices and increased competition for the most desirable properties.
The S&P/Case-Shiller national home-price index recently estimated that 2016 prices are within four percent of the peak in 2006. In some areas, low inventories around the country are making the situation even more challenging.
These conditions are introducing first-time home buyers to common challenges and frustrations while searching for their dream home. As a result, it’s easy to concentrate too much on home buying “can’ts” rather than “can-dos.” Here’s some advice on how to overcome some common barriers:
“I Can’t” #1: I can’t figure out the home-buying process
It’s essential to do research and to be equipped with basic information, but also be willing to ask for help when needed. An experienced real estate agent can can keep a first-time home buyer in the know on everything, from area sales trends to the latest changes in state and federal laws that could impact a mortgage application.
“This is where experienced, licensed professionals can help. Real estate agents can be an advocate for the buyer throughout the entire process.”
“I Can’t” #2: I can’t find the perfect home for my family
Finding the perfect home may not be realistic, but shoppers can find the right home. Personal situations will dictate a first-time home buyers’ ability to wait for a home in a particular neighborhood or design style to come on the market, but not everything has to be left to chance.
The key is to set realistic expectations and not fixate on negatives that can be changed. Whether it’s the number of bedrooms or distance to work or school, it’s alright to have some non-negotiables. However, buyers should be willing to be flexible on things that can be relatively easy to change, like paint colors or landscaping.
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“I Can’t” #3: I can’t afford a 20 percent down payment
Putting 20 percent down on a home has become more of a guideline than a rule. Today, not being able to put 20 percent down does not mean buying a home is out of reach. Depending on a first-time home buyer’s financial situation, there may be a responsible way to get into your new home without putting 20 percent down.
Government-sponsored loan programs from the Federal Housing Authority, Fannie Mae, and Freddie Mac provide loan options that require down payments as low as three percent. Veterans Affairs (VA) loans don’t require any down payment. While those programs are often great options for consumers who qualify, buyers should keep an eye on their potential total monthly payment. Some of these loans include fees and private mortgage insurance (PMI) that could significantly impact your overall cost.
Whether a house-hunting novice or seasoned expert, being informed, getting the right help, and having a healthy dose of determination are the best ways to turn a dream home into a reality.
Source: “Things first-time home buyers need to know,” Florida Realtors