First-time homebuyers are struggling to purchase homes due to the fluctuating and expensive housing market. According to the June Cromford report, “On June 29, Freddie Mac announced that it will increase homeownership opportunities for first-time homebuyers by considering on-time rent payments as part of the company’s loan purchase decisions”. Thus, making it easier for people to secure a starter home.
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If you are first-time homebuyers, here are some tips to prepare you for your starter home:
1. Review your finances
How much are you able to save each month to go towards your down payment? While you are waiting to purchase a home, take this time to save. The down payment can help reduce your monthly mortgage payment and save you from paying private mortgage insurance.
How much of a mortgage payment are you going to be able to afford? Buying a home is one of the most important purchases of your life, so look at homes that are within your means. Have a monthly budget. Know that there are other costs that come with home ownership besides just your mortgage including: furniture, water, gas, electricity, HOA fees, etc.
2. Look into a first-time homebuyer loan
Do your research on different types of loans and what you can qualify for. You might find that you qualify for a generous first-time home buyer loan. This will allow you to put a smaller percentage down. However, calculate your monthly cost including interest and private mortgage insurance (if applicable) to ensure you can still afford the home.
3. Establish your “wants” and “needs”
Tell your realtor about your needs and wants, so they can narrow down homes that have the necessities, with potential perks. For example, if you have a family, one of the “needs” you may establish is to have separate rooms for the kids. You may want a pool but could opt for having it built later when you have the finances to do so. Everyone’s “needs” and “wants” will look a bit different, so it’s important to not assume your realtor knows everything on your list.
4. Remember, you are looking for a place to start
Home ownership is a great investment. Your first house might not be your “dream” home, but remember, this is a “starter” home for a reason. As you get more established in your career, you can build up savings for renovations on your home.
By investing in a home now, you are setting yourself up to trade in for an upgrade in the future. You can even keep your starter home and make it a rental property when you are ready to move into your next house.
Finding your starting home can be scary but with the right mindset and people by your side, it can be a very smooth process. Make sure that you are staying within your budget, selecting a home with everything you need and open to growing in that first home.
Rich La Rue is the Designated Broker for HomeSmart Phoenix, the flagship brokerage operation in the HomeSmart system. La Rue has more than 38 years of experience in real estate sales and management from real estate offices to regional and national operations. La Rue began his career in real estate in 1983 in Phoenix, Arizona as a sales associate. In 1986 he earned his Arizona Real Estate Broker’s License. He also holds a California Real Estate Broker’s license, GRI, CRS, and CRB designations as well as the e-PRO and the SFR certifications. For more information, visit www.richlarue.com.
