You know for the long run, owning a home is better than renting when it comes to building personal wealth. But on a national level, we see the group of first time home buyer at 30 year lows. There are many issues first time home buyers need to tackle before they can go forward.
Renters Continue To Have Trouble Buying First Home
Lets understand why first time home buyers are having trouble buying first home. It has a lot to do with finances. Rents are increasing across the country as there are limited supplies of homes to purchase. And as the rents increase, the wage growth has not kept pace. Thus, the renter is paying more of their total income towards increasing rents and not being able to save money towards a down payment for that first home purchase. Rents will remain high as long as a) the economy continues to grow and b) home builders do not build new, affordable homes at a faster rate.
There are other factors that are holding back first time home buyers in making that first home purchase. Many renters are carrying a large amount of student or credit card debt which can effect their overall credit scores. Some renters are waiting to get married first and this is happening a bit later. Others are wanting to make sure their jobs are secure and they know they won’t be leaving an area. Many renters over estimate upkeep and repairs on a home and this can shy them away from taking the leap. And finally, many do not understand the process and feel overwhelmed with the thought of trying to purchase a home.
This is when your friendly Realtor steps in. It would be advisable to hire a Realtor early in the process so they can go over all the steps and help you understand the facts VS rumors you might have heard. They can represent you as a Buyer’s Agent and in most cases, work on your behalf (not the Seller) and do this for free! Interview two or three Realtors and make sure they understand your needs and can communicate with you in a way your comfortable with.
The Realtor will likely advise early on to speak with several lenders. Those lenders will want to run your credit and see if your scores are above 635. Anything lower, they can assist you in getting the credit scores up. You can also look up your own credit scores at www.AnnualCreditReport.com for free. The lender will also want to review your job history and then set a price limit that you could be approved for. During this process, you may also want to think about budgets. There are wonderful applications that you can download including “Mint“, “Wally” and others. Setting these budgets will help you see areas where you can save money for that down payment. The Realtor can also advise you on ways for other parties to assist you with your down payment and closing cost plus give you a realistic view of upkeep and repair cost on a home. And finally, the Realtor can guide you to areas with homes that are nice and affordable. Many renters live in the chic areas of town…but these areas are also expensive and may not fit those budgets you have set for yourself.
With proper planning and reaching out to experts like myself, renters will not have trouble in buying their first home. In fact, it should be an exciting experience when your armed with the knowledge needed to make the jump…and buy your first home.
To learn more about buying your first home or more information, please contact Mark McNitt with Bernstein Realty, 832-567-4357