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First Time Home Buyer Info

FIRST TIME HOME OWNERS – KNOW THE FACTS!

If you are interested in buying your first home, don’t allow myths to dissuade you from trying.

The truth is that with home prices stabilizing, it’s a little easier for the first-time homeowner simply based on price. However, with so many options available, that doesn’t mean you can’t qualify for a mortgage loan. You just need to know what to plan for and what questions to ask.

Studies show that many potential homeowners believe they can’t buy a house when in fact, there is strong possibility that they can. Close to 15% of people living in the United States state they would like to buy a home within the next few years but believe from a financial perspective, they won’t be able to. Another 10% state they can afford a home but for other reasons, probably won’t buy for a while.

Here are some myths:

  • In order to qualify for a house, you need 20% down
  • Lenders are required by law to provide you with the best possible rate for your loan
  • You can’t qualify for a house if you’ve been with your current employer less than five years
  • Your credit must be perfect
  • Mortgage interest is not tax deductible

The truth is these are just myths. Now for the truth:

  • More and more innovative mortgage packages are being created, offering the borrowers options between 3% and 5% down. Some lenders offer zero down, if you have excellent credit. For first-time buyers, it’s in your best interest to do some serious comparison-shopping.
  • Every lender works with its own rates bases on their standards as well as the type of loan being considered. Rates change literally every day so once you’ve made the decision to buy a house, check rates with more than one lender and check on a daily basis.
  • Job stability is important but the five-year rule is merely a myth. For example, if you have worked in public relations or some other industry for 10 years but have had three jobs in that time, because you’ve stayed within the same business, lenders will often consider this as continuous employment, especially if you’ve made advancements. In addition, solid credit and a larger down payment can compensate for work history in some instances.
  • It’s true that credit is very important when qualifying for any loan. However, if you have been out of a bankruptcy for two years and can provide a good letter of explanation to the lender, they will usually accept that. If your credit is in real bad shape, consider a credit counseling service to help you get back on track. Generally, this can be done in as little as 12 to 18 months.
  • As you make your comparisons of the financial benefits of renting versus owning, be sure to consider tax deductions. When you buy a home, the closing costs, mortgage interest, and points are all tax deductible.

The best things a first-time homebuyer can do are conduct research and ask many questions. Remember that buying a house is never easy for anyone. However, interest rates are currently lower than they’ve been since the 1960’s so if you can buy a house, this is probably a great time.

With being a first-time homeowner, there are many questions you’ll want to ask. It’s easy to focus in on the size of the rooms, the structure, the lot, but there are other options to consider – things you need every day to live. Here are some examples:

  • Public transportation – If you depend on public transportation then you need to check into what options are available in the area you are interested in looking.·
  • Aging parents – More and more families are taking care of elderly parents, therefore, you should think about any special needs as you start looking.
  • Public safety – What is the crime rate in the preferred area? How close are public services such as police, fire, and hospital? · Parking – Will there be any issues with parking? If the house you’re interested in doesn’t have a garage, is there ample off-street parking?
  • Utilities – This is an important finance to look at. Usually the seller can provide copies of the past few months for you to review, giving you an idea of what you would need to budget for.
  • New communities – If the area you want is in an entire new community, what recreational amenities are offered? Is there a clubhouse? Pool? Playground? Exercise facilities?
  • Property taxes – Some tax rules provide special benefits for veterans, elderly citizens, and even long-time residents. You should inquire what these benefits are and whom they cover.

When you get to the point of being serious about buying a house, these are the steps to follow to make the qualifying and purchase as easy as possible:

  • Establish good credit habits and cleanup any unfavorable reports.
  • You should start saving for the down payment, closing costs, and extra for any hidden expenses. Don’t forget about utilities, moving expenses, and items needed for the home.
  • Research and read. Go to your local library and read up on as much as possible about financial management and home buying.
  • Start looking at various areas where you might be interested in living. Go to some open houses and do some comparison-shopping.
  • Meet with a reputable real estate agent and start the preliminary process.

Just remember that there is no reason to be afraid or intimidated when it comes to buying a house. The main concern expressed by  couples is that they aren’t sure where to begin. There is also the fear of rejection when it’s very possible that the credit situation isn’t as bad as they believe.

Home buying has become increasingly easier thanks to the Internet. Years ago, people hated the one-on-one approach of determining if they qualified for a loan. The Internet has made it so much easier where people can now go to various lenders, provide some information, and be notified online whether or not they qualify.

In addition, mortgage advice is also readily available. Whatever questions you have can easily be asked from the privacy of your own home. Responses are accurate, thorough, and always confidential.

 

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