Buying a home for the first time can be daunting and scary. It is hard to know where to begin and how to even approach this situation. Before you take this leap, it is important to understand the benefits, as well as the disadvantages, of the home buying process. Thought this blog post we will share: why buy a home, the process of first time home buying, and the pros and cons of buying a home. Within our website and this blogpost we offer reliable advice and how to chose a reputable lenders when buying a home for the first time!
Why Buy a Home?
Why should anyone buy a home? It is hard to know if you should buy a home. Whether or not buying a home is right for you depends on your individual circumstances. You should carefully consider your financial situation, your lifestyle, and your goals before making a decision.
Here are 5 reasons why:
- Tax benefits, some expenses are deductible at the end of the year.
- Appreciation, growth in value
- Equity, something not accessible to renters
- Payment predictability, unlike rent that goes up, cost will decline the longer you own a home.
- Freedom & Stability, when you own a home you’re able to do anything, without landlord approval. You are more likely to have the same neighbors for a longer time, and children will be able to create friendships as they get older staying in the same school district.
If you are considering buying a home, it is important to do more research and talk to a financial advisor to get personalized advice.
First Time Home Buying & Current Mortgage Rates
The process of buying a home for the first time is tedious and has around 14 steps. The steps include: determining your budget, getting pre-approved for a mortgage, create a home wishlist, hire a real estate agent (optional), start house hunting, making an offer, negotiating an offer (optional), home inspection, secure financing, appraisal, closing process, final walkthrough, closing day, and post-closing tasks.
Determining Your Budget
In order to determine your budget you need to evaluate all your finances, income, savings and monthly expenses. For the first step you could use a mortgage calculator to estimate what you could afford. A mortgage calculator will also take into consideration the current interest rates and down payments requirement. Then you need to get pre-approved for a mortgage, in this step you might need to get in contact with a mortgage lender or broker to get pre-approved for a loan.
Getting pre-approved will help with giving you a clear idea of the loan amount you qualify for and help you narrow down your home search. Then creating a home wishlist and then hiring a real estate agent. Real estate agents will help find suitable properties, negotiate offers, and navigate the paperwork. Then you can actually start house hunting and once you find your dream house you can make an offer. When making an offer it will include purchase price, contingencies (such as inspections and financing), and a proposed closing date. This step is where you are able to negotiate, you are able to negotiate for better terms and once you reach an agreement you will be able to close. Then there will be an inspection and then you will secure your financing. You will need to finalize your mortgage application with your lender and any additional documentation required.
Then the mortgage lender will order an appraisal to determine the fair market value of the property. The appraisal will determine whether the home meets or exceeds the agreed-upon purchase price. Then all the closing tasks will happen. When buying a home it is important to remember that buying a home involves various costs, including the down payment, closing costs, property taxes, and ongoing maintenance expenses.
Pros and Cons of First Time Home Buying
Buying a home for the first time is a scary and daunting thought. It could be a life altering decision, and of course very expensive. Therefore, you want to know what you are getting yourself into. There are several pros and cons that go with first time home buying. The biggest pro for buying a home for the first time is building equity. Equity is defined as your assets minus your liabilities. A great way this was explained, is that purchasing a home is like a forced savings account. You aren’t actually putting money into an account, but by paying off your mortgage you are building equity. You can build even more equity, by paying more than your mortgage every month. Having strong equity leads to a better financial future.
Another pro is stability, which is a big one, especially for young adults who are more often than not first time home buyers. You don’t have to worry about having a landlord, getting asked to leave and dealing with the drama with them. Also, the worrying thought of your rent increasing after every year is gone.
One of the biggest pros that we came across was the freedom to customize and do renovations. When you are renting, you have no say in the house looks, the renovations, or the landscapes. Lastly, A great pro to look at after buying a home, is that the value of homes generally increases over time.
Even after looking at the pros, first time, homebuyers should still look at the cons, as some of them are very important. The most important con that we can cross was the large upfront cost of a down payment and closing fees. These expenses could be challenging especially for a young adult or a young adult couple.
Another con that seemed to be a hindrance to some was the ongoing expenses that come along with buying a home for the first time. Now that you are the owner, you are in charge of all maintenance and repairs, homeowners insurance and property taxes more often than not, these could be higher than some may think.
One con we found very interesting, especially after talking about the pro of building equity is the con of interest payments. While you do build equity a significant portion of your mortgage payments, especially for first time homebuyers go to interest, and so this may take even more time to build equity.
Lastly, another con to me was the lack of flexibility. We think this one is a big con, especially for young adults that are new to the job market. Once you buy a home there’s a good chance you are tied down to that city or area and makes it a lot harder to move. These are definitely factors that first time homebuyers should be looking at.
We provided tips and steps to simplify the home-owning process for first-timers. Upon reading the benefits and procedures, users would surely be less confused by the tedious processes. Our website offers convenient access to internal links which direct users to FAQ pages and application processes, as well as external links that direct them to online forums where we, as professionals, share our experiences and advice.
First time home buying sure isn’t easy, but our website is here to help you through your journey. Contact us today!