I have worked with many first-time home buyers over the years.Â The home buying process can be an overwhelming process, but that is why as a buyer you should get an experienced agent to help you with the process to make it not seem so overwhelming, your agent is there to help you every step of the way.Â As the Realty Times articles points out, it is more difficult for buyers to get qualified today than a decade ago, but if you have a good credit score, have saved up, you should not find too many hurdles to qualifying for a home loan.Â Interest rates are at record lows and could go lower depending on what the Fed announces later today or this week, if you thinking about buying, why not consider it now? It is the fall market, more homes are coming on the market and rates are hard to be beat.
Considerations for Today's First-Time Buyers
by Carla Hill
First-time buyers are naturally very nervous about entering the market. This was true during sky-high interest rates in the 1980s. It was true when the real estate market was booming in 2005. It is still true today.
Newbies to the market worry about the cost of buying, the process itself, and of course what it will mean for them to be a homeowner. Owning a home is typically the biggest financial responsibility a person will undertake. It starts with the cost of a downpayment and closing costs and continues with a monthly mortgage payment and annual maintenance and repairs.
Today's market, however, brings new worries to the table. The economy is on the brink of a renewed recession. Fewer buyers can qualify for a home mortgage, especially since many lenders want at least 20 percent down. Plus, unemployment rates have remained consistently above 9 percent.
What do first-time buyers really need to know about today's market? Here are some things to consider.
Interest rates are at historic lows, with 30-year fixed rates between 4 and 5 percent! This is incredible. Imagine the difference between an interest rate of 4 percent and one at 13 percent. For a $100,000 with 20 percent down, you'll find a payment near $568 a month. For the exact same home at 13 percent you'll see a monthly payment of just over $1,000.
Home prices fell after the bubble burst, leaving affordability rates at generational highs. This means there are great deals to be had. In addition, there are a large number of foreclosure and short sale properties available, sometimes at even more savings.
This means prices are low and interest rates keep them that way. You will still need a downpayment, however. This is now expected to be at least 20 percent of the total cost of the home.
It's not all silver linings, though. Home values are still falling. It is of paramount importance that if you're in the market to buy, you must research your own local market trends. Are home values plummeting? Are they holding steady? Many times the housing market is directly linked to the health of the jobs market. What is the state of employment in your community?
There are reasons to buy other than just making a sound financial investment. If you plan on remaining in your home for many years to come, then now is a good time to buy regardless of pricing fluctuations. The social benefits still remain strong and your home will be an investment over the long-term.
Be sure to think long and hard about the true cost of homeownership and if it's right for you. This is not a time to get into a financial situation you can't handle. Is your job steady? Do you have an emergency fund in addition to your downpayment amount?
Hiring a knowledgeable real estate professional can be an excellent first step on your way to finding the right home for you. They can help answer all of your questions about the process. There's no reason to go into this process blindly. Let them guide you.
Buying a house is a big decision, but don't let scary headlines deter you. There are great deals to be had in today's market.