If you’ve been paying attention to the national housing market, you’ve likely realized it’s a seller’s paradise out there. First-time home buyers might be chewing on their nails in fits of anxiety, but the truth of the matter is that it’s entirely possible to buy your first home during the current real estate climate. Your chances are exponentially improved if you look at the buying process as a war, and you can’t win a war if you don’t have the right arsenal. In this case, information is your best weapon.
Beware of Bidding Wars
Know that there’s a very good chance you can become involved in a bidding war when you buy a house for the first time, and that’s especially true if there’s a shortage of homes for sale in your area. While you can win such a war, doing so might mean spending more than you can afford. You also have to consider the fact that a property’s inflated price could later result in you owing more on the home than you can actually sell it for should real estate prices fall in the future. You might be able to mitigate a bit of the risk involved in a bidding war if your local economy is stable, which is likely to make property prices equally stable in the coming years.
Develop an Airtight Budget
As you’re gathering information on your local housing market, get a solid idea of how much you’re willing to spend on your first home. Talk with your real estate agent about the fees and costs you should expect, and try to save more than you actually need. Even if the market is stable in your area, there could be unexpected costs and maintenance for your new home. Make sure you don’t go over your budget if you can help it, and keep your other financial obligations in mind as well.
Think of How Long You’ll Be Staying in Your First Home
As a first-time home buyer, you might be buying a property as more of an investment, or you may be looking for a place where you can get settled and lay down roots. Know which category you fall into, and keep it in mind while you’re looking for a home. The reason for this is that the existence of a volatile market might not mean much to you if you plan on living in your home for several years to come. If you only plan on staying in the property for a short while, ask your real estate agent if he or she sees the market getting better or worse in a few years.
Take a Look Around
If you’re wanting to buy in a bigger city, you might notice aren’t very many homes on the market. And even if there are, they may not remain available for very long. Before you pull your hair out in frustration, know that a strong economy, plentiful jobs, more people moving into the area, housing construction and increasing incomes are all the makings of an improved real estate market. Should this be the case in your city or the city in which you’re thinking of buying a home, you’ll want to exercise patience and caution. This could mean renting longer, but it also means you have more time to save up a larger down payment.
While you should always take care of the basics of buying a home, such as eliminating discrepancies on your credit score, saving up for your down payment and improving your credit, the current market requires a few extra steps. Think you're ready to take the next step as a First Time Homebuyer? Let us help!