REAL ESTATE SPECIAL SECTION
What First-Time
Homebuyers Should Know
Last year was a great year for new homebuyers. According to
the National Association of Realtors, about 35 percent of the
homebuying market was made up of first-time buyers. Yet, each
year is not created equally in the mortgage industry and real estate
market. Changes happen frequently and it is often hard to keep up.
If you’re looking to break into real estate for the first time, here are
some insights into how to navigate the market.
SAVING.
Step number one for a first-time homebuyer should always be
saving. Take a look at your current finances. It’s recommended
that your mortgage payment not exceed 30 percent of your gross
monthly income. See where you can cut back spending to put away
a little extra out of your paycheck every month for your new home.
Not only can this cash go toward a down payment, but most likely
you’ll need furniture, appliances, and decorations to furnish your
new home. Don’t just calculate the amount of money needed for
a down payment. Keep in mind the unforeseen expenses such as
home repairs, agent fees and closing costs. You can never save too
much!
1. Mortgage.
Applying for a mortgage can be an intimidating process, but
if you prepare accordingly, you’ll be happy with the outcome.
According to LendingTree.com, mortgage lenders are
allowing higher debt levels for borrowers with lower down
payments (as little as 3 percent on a conventional mortgage
loan). You may not need the typical 20 percent down that
was required of homebuyers a few decades ago. If your debt-
to-income ratio is high, you may not have to worry. Mortgage
companies are making it easier for borrowers with more debt
to still qualify.
2. Mortgage rates and tax limits.
Unfortunately, not all news is good news for first-time buyers.
Mortgage rates are predicted to continue to rise in 2018,
expected to reach 5 percent toward the latter half of the year.
In addition, new tax laws that went into effect at the beginning
of the year have new limitations. Be sure to look into mortgage
interest deduction and other tax deduction limits that may
affect your taxes for 2018.
3. Agent.
Having a real estate agent in your corner for a first-time
purchase is key. Agents will not only help you navigate the
home-buying process, but can also be a valuable resource for
an inside look at new homes that go on the market. This gives
buyers the opportunity to view homes that may not have made
it onto real estate websites for public viewing.
4. Location.
Your dream house may not be in your dream location,
and your dream location may not have your dream house.
Don’t get stuck in a rut if you’re not seeing everything you
want in your price range. Typically, you’ll need to make
some compromises with your first home. Keep a few non-
negotiables in your back pocket, but otherwise be open to the
idea of putting some of your own upgrades and changes into a
home that may not have everything on your wish list.
5. Home.
Don’t get stuck in the mindset that you should spend every
dollar that you qualify for in your mortgage. This could lead
to bigger problems down the road. Look in the market under
your max budget and be creative when looking at homes for
ways to make improvements or changes that better fit your
needs. A little bit of sweat equity can go a long way and will
give the home your own personal touch.
6. Offer.
Once you’ve found a house you want to call “home,” work
with your real estate agent to come up with an offer the seller
can’t refuse. Whether the house needs some improvements
or it’s a hot buy on the market, your agent can guide you into
making a serious offer to the seller. If you’re feeling passionate
about the home, write the seller a letter explaining why you’re
the best buyer for the home. These touches can sometimes be
the difference between getting the house of your dreams, or
losing it to another buyer.
7. Moving.
You’ve done it! You’ve purchased your first home. Now that
you have a mortgage to pay, keep in mind some money-saving
tips, like asking your closest family and friends to help you
move! A little pizza can go a long way when looking for some
extra help. Make a plan for those personal touches to add to
your home. Test out paint colors in each room to make sure
you like the color in the daylight. Purchase furniture after
making detailed measurements (you don’t want to come
home with something that doesn’t fit!). Add some curb appeal
as a finishing touch and as a way to meet your new neighbors!
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