Financial Facts First Time Home Buyers Need to Know

It’s Brutal Out There
Being a first-time home buyer can seem like an overwhelming task and today a lot of buyer’s markets are rife with competition. The current housing market has asking prices steadily growing higher each season, meaning many looking for their first home have found that places they could afford just last year are out of their budget now. The dropping supply of homes available means a tougher market. The median price of existing homes as of August 2021, has increased by nearly 15%. Throughout this article, we’ll cover some of the money moves you’ll need to consider when making a home purchase.

Know Your Budget
Many home buyers can feel left on the sidelines with the shortage of homes on the market. Some are even tempted to blow their budgets trying to afford a home. As of early 2021 people are paying on average 28% over market value for homes, but even still, you must stick to your budget to attain stability while paying off your new home.

Financing and Down Payments
Remember that the down payment on a house usually runs near 5 – 20% of the home’s total cost. The more money you are able to put down, the more favorable interest rate you’re likely to get. This may also help you avoid requiring Primary Mortgage Insurance (PMI) and bolster your credit. With that being said you don’t necessarily need a large sum for a down payment in all cases. Be sure to look into special grants and offers for first time home buyers that can aid you in a low interest rate and little to no down payment if you qualify. Reminder: being approved for a mortgage is great and exciting, but you do not and should not always accept. First, assess your monthly expenses and how much you can really afford for a mortgage. Remember to factor in property tax and other fees like home maintenance.

Get Ahead
Equipping yourself with all the financial facts will increase your chance of success in becoming a homeowner. It’s essential to commit to budgeting and creating a financial plan so you feel confident in buying a home for the first time. Preparing your financial paperwork ahead of time will also allow you to prequalify for what homes you can afford and give you a leg up on making offers in this fast-paced market. Homeownership can be achieved through preparation and insights into your options even during a pandemic!