Buying a home is an exciting time, but there can be a great deal of anxiety for first time homebuyers just getting to know the market. Even if you have saved your down payment and done the math, you might fear biting off more than you can chew when looking at different properties.
Not to worry! The best defense against homebuyer fears is knowledge, and you’ve come to the right place to get it. If you are a first time homebuyer, you can rest assured that purchasing a new home is a great investment, if done in the right way. Here are some things you need to know about today’s market in order to combat your fears and make the best choices.
Things Are Looking Up
Interest rates are expected to start creeping up thanks to a recent increase in the federal funds rate but, as we can see from our Weekly Mortgage Watch, they’ve dropped the past 4 weeks in a row. If and when the economy shows more signs of recovering, rates will trend upward again. That means now is the best time to find a home you love before interest rates and property values rise, and your purchasing power diminishes.
Your home will probably be the biggest purchase you make in your lifetime. It never pays to rush into a big decision, but as property values and rates rise, the longer you put off making a decision, the less likely you will be able to afford everything on your wish list. And as a first time home buyer, you probably have a pretty big wish list!
Do Your Homework
Be prepared before you start searching for your dream home. Sit down early and create your wish list, and then rank every item as either “must have” or “nice to have”. You may even want to further rank the list items from 1 to 10, with 1 being the most important and 10 being the least. As you begin your house hunt, be prepared to give up or compromise on some of them if you are able to get most of the “must haves” on your list.
Know What You Really Can Afford
Many people calculate what they think they can afford for a mortgage payment without factoring other costs of home ownership into the equation. Home Owners Association dues, real estate tax rates, and insurance premiums all play a role in the cost of owning a home.
You’ll also have to think about maintenance, upgrades and more. Find a mortgage company like Premium Mortgage Corp, early on in your process with an agent you trust. They will help you understand the lender’s affordability calculations and pinpoint a true target house price. To start, check out these 5 components of affordability as well.
Finally, remember that despite your fear that your dream home will get away, there are always more homes coming onto the market, all it takes is persistence to find what’s right for you. Start working with a real estate agent today who can keep an eye on the market for you while you get all your ducks in a row.
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This guest post is written by Brooke Chaplan, a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most her time hiking, biking and gardening. Brooke is available via Twitter @BrookeChaplan.
