Most home buyers have decided to have a financial dip. How it all works out is different, in large part, about the amount of homework conducted before diving . Big questions loom for first-timers, ranging from financial concerns to the age-old lease versus buy conundrum.
Misconceptions
Historically, Americans have categorized homes. Homeowners often scoff at renters who”throw their money away each month.” While the Department of Housing and Urban Development, or HUD, still touts the benefits of owning a home, like the mortgage interest deduction, Asher Hawkins of Forbes Magazine believes first-time home buyers should think more critically. The housing market crash which took hold in 2008 left many homeowners with a decreasing investment; the value of their homes was less than the remainder left on their mortgage. All of a sudden, renting did not seem like such a bad thing. Hawkins recommends first-time home buyers to think about all of the expenses of home ownership–down payment, closing costs, insurance, real estate tax, maintenance along with the monthly payment–contrary to the cost of renting.
Geography
Location certainly helps to establish if renting or buying is a better bargain. Many first-time buyers, of course, are assessing the merits of getting their own landlord. According to analysis by the fiscal blog MintLife, homeowners in many cities are better off renting. San Francisco takes the sixth spot on its record. Considering that San Francisco’s housing price to rent ratio is large, MintLife argues that it’s more affordable to lease, even in the very long term. If a renter decides to take the plunge into homeownership, location can also impact his mortgage. Applicants for government assistance, like an FHA loan, face mortgage limits. In some places, this is no problem, however, in expensive markets it may be. In accordance with HUD, the highest loan amount the government will insure on a single-family dwelling is $729,750 in San Francisco, as of 2009.
Types
The suffering of some homeowners thanks to the housing recession created chance for first-timers previously sitting on the sidelines. Deep discounts are available via foreclosures and short sales. The former happens when a homeowner defaults on his loan, the lender chooses it sells it at a relative reduction. The latter is a last-ditch attempt by a homeowner facing foreclosure to sell her home for less than is left on her loan. Quicken Loans offers several strategies for first-time home buyers looking for a sweet thing. Buyers should see as many foreclosures as you can to be sure they are not obtaining a rotten egg maintenance-wise. Short sales offer their own challenges; primarily, they tend to take longer to close than conventional foreclosures and sales.
Considerations
First-time home buyers should get a head start on the process, advises the California Housing Finance Agency. First-timers should get pre-approved for a mortgage. If the prospective employer has bad credit, then the Agency suggests meeting a creditor to determine exactly how this might impact or inhibit the process. First-timers often overlook the simple fact that they’ll need cash for a deposit as well as closing prices. Many states, including California, as well as the national government offer aid programs to aid with those outlays.
Expert Insight
The experts at Quicken urge that first-time home buyers take a step back before going through with matters. They urge people considering purchasing their first home to check if they really can afford it. Home prices shouldn’t just take up more than 25% of a household’s earnings, based on Quicken.