Real Estate Information

7 Tips for First-Time Home Buyers
A year after the financial collapse of 2008, the housing market is very different than it was before the foreclosure crisis.

Here are seven bits of wisdom from economists and financial planners for anyone contemplating a home purchase today:

• Old-fashioned basics are more important than ever. The safest way to purchase a home is to put down 20 percent on a fixed-rate, 30-year (or less) mortgage.
• Don’t become overconfident about income growth. Even though buyers in their 20s and 30s will likely see their incomes grow more quickly than previous generations, it is important to act sensibly when borrowing.
• Anyone contemplating adding children to the family should calculate whether they could live on one income because having both halves of a couple work may turn out to be impractical.
• Include a maintenance budget. Even new homes need upkeep and repairs.
• Buyers who can't afford their dream home now should opt for a starter home where they can save money each month for what they really want.
• Consider a property that can be expanded and improved down the road when money is available.
• No two buyers are the same, but they should all feel confident with the loan they enter into, no matter the size of the mortgage.

Source: The New York Times, Ron Lieber (09/12/2009)

I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.