What Should First Time Buyers Know?
By Chris Petry
Buying a home can be exciting and terrifying in equal measure. Of course, the only real reason to harbor any fear is because, by virtue of being a first-time buyer, it’s something of an unknown and thus frightening. What if I told you there was no reason to be frightened at all? What if I told you that buying a home was much, much easier than it seems? I know what you’re thinking, “should I buy a home at all?” The answer is a resounding, “yes.” Let’s take a look at some of the reasons you SHOULD buy a home and what you should know about the real estate process in general.
It's, in some markets, a better deal than renting in the long term.
The average monthly mortgage payment in the Greater Pittsburgh or Cleveland metropolitan area, according to Investopedia.com is just over $1,200. The median rent price is just over $1,400. Sure, you’ll be on the hook for repairs and renovations as a homeowner but you also own it. That means that any work you do to the home, helps you to build equity. There’s a potential return on your investment. The only person who stands to benefit from an increase in value to your apartment is your landlord.
But don’t you, like, need money and stuff to buy a home?
The rule of thumb for conventional mortgages, in terms of a down payment, is up to 20%. However, there are numerous financing options to get around that. As a first-time homebuyer, you’ll likely qualify for a first-time homebuyer loan, which can bring that number down to 3-5% of the sell price. There are also government-backed loan options like VA and USDA loans, which assuming you qualify, might allow you to come to the closing table with no down payment at all.
Furthermore, getting prequalified for a mortgage loan means you’ll know exactly how much house you can afford based on your current income and credit worthiness. Ideally, you want your mortgage payment to be around 28% or less of your gross monthly income. It’s more doable than you think!
So, the monthly payment’s not bad but what about OTHER expenses?
Well, there are other expenses. That’s true. Mortgage lenders, more often than not, require you to purchase homeowner’s insurance. You have to cut the grass or pay someone else to. You’re on the hook for utilities and, as we discussed above, any repairs or remodeling projects. Don’t let any of that deter you. Homeowner’s insurance protects your investment. Think of it as an investment on the investment. Yard work, repairs and remodels are an inseparable part of homeownership but, again, they add value to your home.
Buying a home provides unparalleled freedom.
Want to paint a mural on your wall? Have six cats? Park in the yard? Do laundry at 2 a.m.? Do all that and more as a homeowner. No yearly inspections. No yearly payment increases. Oh, did we fail to mention that? A fixed mortgage is just that: fixed. You know what you’ll be paying every month until the end of your loan obligation, barring minor increases or decreases in property taxes and insurance.
You’re not in it alone.
An important detail people often forget to mention is that you have the support of reputable real estate professionals behind you every step of the way. From the preapproval process to the closing table and, often, beyond. If you have questions about anything, ask your REALTOR. Ask a loan officer. They want to help. You have everything to gain and nothing to lose.
