First Time Home Buyer Tips
Complete First Time Home Buyer Tips & Information.
Most first time home buyers
have many questions throughout the home buying process. We are constantly
receiving new questions. Below, you'll find many of the questions that first
time home buyers have, along with our answers. If you have a question that isn't
in this list, please send it to us at:
firstname.lastname@example.org. We we can't promise that we will
answer your question directly (but we do try!) we'll post the question and
answer in this section.
Q: What are the
benefits of buying versus renting?
A: The short answer is that a home can be an
investment, will increase in value, will provide you with more privacy,
enjoyment and freedom. Also, the mortgage interest is tax deductible and
will result in substantial yearly tax savings. We cover this in more
detail in our article:
Reasons You Should Buy Your First Home.
After paying rent, utilities, car payment, food, clothing, gas, phone, and
everything else, there is no way I can save for a down payment. What can I do?
That's a Catch-22. Once you own a home, the equity in it will be the
source for your next down payment when you sell and move into another
house. However, as a first time home buyer, you do not have any equity
in any property, thus you'll have to come up with the down payment
another way, and saving enough for a down payment can be next to
impossible. Most states as well as the Federal Government offer
financial assistance, including outright cash gifts for use as a
down payment, to first time home buyers. Please visit
first time home buyer grants
to see what is available to you.
Q: With home prices so high, should I wait to buy until prices
Well, probably not. Prices may indeed come down, and might even
come down significantly. However, prices are directly related to interest rates.
When interest rates fall, that makes monthly payments more affordable and prices
get bid up due to an increase in buyers. Conversely prices fall when interest
rates go up. Let's assume that you are looking at a home that is listed for
$200,000. With interest rates currently running at about 6.5%, the monthly
payment on a $200,000 loan would be $1,264.14. If interest rates continue to
rise (a very likely scenario), the price of that house might fall to $150,000.
However, at an interest rate of 10%, the $150,000 mortgage loan would have
payments of $1,316.36. As you can see any savings in the cost of the home would
be offset by an increase in the interest cost because of a higher interest rate.
In this example, there would be no reason to wait, and this doesn't even take
into account tax savings, which would add to the reasons to buy now instead of
Q: Should I use a real estate broker?
Using a real estate broker is a very good idea. All
the details involved in home buying, particularly the financial ones, can be
overwhelming. A good real estate professional can guide you through the entire
process and make the experience much easier. A real estate broker will be
well-acquainted with all the important things you'll want to know about a
neighborhood you may be considering...the quality of schools, the number of
children in the area, the safety of the neighborhood, traffic volume, and more.
He or she will help you figure the price range you can afford and search the
classified ads and multiple listing services for homes you'll want to see. With
immediate access to homes as soon as they're put on the market, the broker can
save you hours of wasted driving-around time. When it's time to make an offer on
a home, the broker can point out ways to structure your deal to save you money.
He or she will explain the advantages and disadvantages of different types of
mortgages, guide you through the paperwork, and be there to hold your hand and
answer last-minute questions when you sign the final papers at closing. And you
don't have to pay the broker anything! The payment comes from the home seller -
not from the buyer.
There is a
new service for finding real estate
agents that is highly recommended. Not only can you find an agent, but with this
service you can have agents compete for your business.
Q: My Credit isn't perfect. Should I try to
improve my credit score before applying for a first time buyer
A: Yes. Improving your
credit score will likely take a minimum of 2 months, but will be well worth the
wait. By getting a higher credit score, you will greatly increase your chances
of approval on a
first time home buyer mortgage as well as qualify for the lowest rates
given only to those people who have the best credit rating.
Q: My husband and I are
looking at houses in the $225,000 price range, but we don't know if we can
qualify for a mortgage of that size. Should we get pre-qualified for a mortgage,
and how much will it cost?
A: Yes, it is a
wise move to get pre-qualified for a mortgage before you make an offer to a
seller. Having been previously approved by a mortgage lender removes a large
amount of uncertainty in the seller's mind, and increases the likelihood of a
quick closing. With pre-qualification, you'll be in a stronger position to
negotiate a better price on the house that you would like to buy.
Prequalification is quick and easy. Some lenders charge for the service, others
Q: Do you have a forecast on mortgage rates?
Yes, we do. Please see our
Mortgage Rate Forecast for where we believe mortgage rates are headed this
year and next.
First time home buyer credit
First time home buyer tax extension
It is highly recommend that you also visit the
First Time Home Buyer Grants page
for free assistance with the down payment. This will make it possible for many
people to qualify for a
first time home
buyer loan who wouldn't have qualified without the grant assistance.
Return to the
First Time Home Buyer
for other types of 1st Home Buying assistance.