Fast Facts about First-Time Home Buyers
- In 2021, there was a noticeable rise in first-time homebuyers, with 34% entering the market, up from 31% in 2020.
- A survey from BankRate shows that first-time homebuyers, on average, are around 33 years old.
- The primary driving force for 65% of first-time homebuyers is the allure of owning their own space.
- Over the past few years, starting from 2018, first-time homebuyers have been putting down payments in the 6% to 7% range.
- Finding enough money for a down payment was deemed the most challenging step by 29% of first-time homebuyers.
- Last year, 28% of newcomers to home buying utilized a gift or a loan from their loved ones to bolster their down payment.
- Student loan debt is a major hurdle for many potential buyers. Among younger millennials, 49% said it impacted their savings, while 44% of older millennials echoed this sentiment.
Preparing for the commitment of a mortgage
Before diving into the home-buying process, it's essential to mentally and financially prepare for the commitment of a mortgage. Understand the responsibilities that come with a home loan and ensure you're ready to take them on.
Importance of getting pre-approved
Never underestimate the importance of a mortgage preapproval. Not only does it offer clarity on what you can afford, but it also signals to sellers that you are a serious buyer.
Taking care of your credit
Your credit health is paramount during the home-buying process. It influences your mortgage rates and approval odds. Stay on top of your credit reports and dispute errors promptly. Refrain from opening new credit accounts, as this can affect your credit score.
Setting aside funds for your down payment
Start saving early for your down payment. The larger the down payment, the lower your monthly payments might be. Moreover, having a substantial down payment can make you a more attractive buyer in a competitive market.
Familiarizing yourself with mortgage options
It's crucial to explore mortgage options and understand the difference between conventional loans, VA loans, FHA loans, and USDA loans. This knowledge will help you determine the best home loan for your situation.
Budgeting for the closing costs
Many first-time homebuyers are unaware of the additional expenses, like closing costs, that come with a home purchase. These can range from 2% to 5% of the home's purchase price, so be prepared.
Identifying your priorities for your new home
When house hunting, make a list of your needs, non-negotiable aspects, and bonus features. This will streamline your search and help you find your dream house faster.
Partnering with a professional real estate agent
A good real estate agent can make all the difference. They'll guide you through the local market, offer valuable first-time home buyer tips, and ensure you make informed decisions.
Making a confident offer
When you find the right property, work with your real estate agent to submit a compelling offer. Confidence can play a crucial role in getting your offer accepted in a competitive market.
The necessity of a home inspection
Never skip the home inspection. It offers a deep insight into the property's condition and can save you from potential future expenses.
Adhering to your financial limits
It's easy to get swept up in the excitement of home buying, but always stick to your budget. Remember, the monthly mortgage payment isn't the only expense – consider property taxes, maintenance, and other associated costs.
Keeping track of essential documents
While everything might be going digital, it's a wise move to keep physical copies of all home-buying paperwork. This can be beneficial for future reference or disputes.
The learning never stops
Even after buying your first home, continue to educate yourself. The real estate market is dynamic, and there's always more to learn.
Navigating first-time home buyer national programs
These are standard loans not insured by the Federal Housing Administration and are suitable for borrowers with good credit scores.
Veterans' housing loans
VA loans, backed by Veterans Affairs, are tailored for veterans and come with benefits like no down payment and favorable interest rates.
Federal Housing Administration loans
FHA loans, backed by the Federal Housing Administration, are popular among first-time homebuyers because of their lower credit requirements and minimal down payments.
USDA loans, targeted at rural areas, offer 100% financing and are backed by the U.S. Department of Agriculture.
About Lori Gelder
Lori Gelder stands out as one of Arizona's premier residential real estate mavens. If you're looking to buy or sell a home or have any questions about the Gilbert, AZ real estate market, contact Lori Gelder
today.*Header photo courtesy of Shutterstock