Todayâ€™s first-time homebuyers are presented with the opportunity of a lifetime. Mortgage rates inÂ DecemberÂ stood near lows last seen during the Truman administration while many home prices were at levels lastÂ seen during theÂ Clinton administration! The combination made housing affordability, as measured by the National Association of REALTORSÂ®, the highest since NARÂ® launched its Affordability Index in 1973. Â Â
Housing inventory is also abundant, enabling first-timers to secure good homes and pave the way to their financial futures. Homes and their long-term virtues of shelter, wealth-building, a sense of community and personal pride are available at bargain-basement prices that wonâ€™t last.
Naturally, first-timers have many questions about home buying.. With research and the services of a licensed real estate professional, buyersÂ can demystify the process and place themselves on the fast track to homeownership.
Knowledge is power â€“ Nine out of every 10 home searches today begin on the Internet. With just a few mouse clicks, you can peruse neighborhoods, search countless online listings and take virtual tours packed with detailed photographs.This gives you working knowledge of home availability and pricing in so by the time you sit down with your real estate sales professional youâ€™re well on your way.Â Â I give many of my buyers a Listing Book account, which allows them to set their own specific search parameters and get notified about new homes the moment they hit the market--we can also leave notes for one another about particular properties.Â
Mortgage payment â€“ In todayâ€™s buyers market, you may face competition for your dream home--especiallyÂ on lower-pricedÂ foreclusures and short sales. Â To establish your spending limit and gain the ability to move quickly on a home, get pre-approved for a loan before you start looking. This process will also help you identify any credit challenges you must address prior to your purchase.
If you donâ€™t have a specific mortgage lender in mind, ask your real estate professional for a recommendation.
Affordability â€“ Costs involved in the purchase of a home â€“ mortgage, down payment and closing expenditures â€“ can be overwhelming to first-time homebuyers. Your lender willÂ look at your income, debt ratio, down payment, property taxes in the area you're looking, insurance costs,Â etc, and give you a range of what priceÂ home you can qualify for and what your monthly costs will be.Â You should also take into consideration other factors that will affect your monthly budget such as utilities and maintenance, (and if you're purchasing a condominium or townhome, monthly Association dues.)Â Â If your down payment is less than 20 percent of the cost of the home, you will also be responsible for private mortgage insurance.
Down payment â€“ The down payment amount varies depending on the value of the home you choose and the type of loan--from as little as 3.5% with an FHA loan to 20% or more.. First-time homebuyers may also qualify for down-payment assistance programs and grants available through their states and municipalities. Contact your state housing finance authority, county housing and community development office for an application.
Closing costs must be factored in as well. These include origination fees charged by the lender, title and settlement fees, taxes and prepaid items such as homeowners insurance or homeowner association fees.Â In some cases, your agent may be able to negotiate the seller paying part or all of these costs.
Making offers â€“ Make sure you visit several different homes to get a feel for the marketplace. Visit the ones you like again to see things you might have missed. Work with your real estate professional to get all of your questions answered before making an offer. And remember there are no silly questions. Make sure you understand and are comfortable with every aspect of the transaction.
And if you're waiting for the exact bottom of the market--you'll onlyÂ see it after it's over!Â Interest ratesÂ have starting to slowlyÂ creep up, which will affect your ability to afford a home.Â Â Home ownership remains a sound financial decision for most and a key component of long-term financial planning. First-time buyers can secure their dreams and build for their futures at some of the most attractive values in years.Â Â