Being a first-time homebuyer is both exciting and daunting. If you are not careful, buying a home that you love could hurt your future money goals and keep you paying a mortgage well into retirement. Here are three tips for first-time homebuyers as they tackle the home-buying process!
The house you buy may not be forever
Because of the soundness of real estate as an investment, many first-time homebuyers want to get the biggest house they can. They may be trying to start families or getting more space for their existing family to grow. Whatever the motivation, buying a house is one of the few times when people try to plan their lives 30 or more years down the road.
Look for a house that suits your immediate needs and understand that every place is adaptable to a degree. A den or an office can become a nursery, a shed can become a workshop, and a basement storage area can become another bedroom. Don’t think you need to plan your life out forever if you choose to buy a home. Make some reasonable, educated guesses about what your life will be like for the next 10 years or so, and buy the house you need for that time.
Don’t become “house poor”
Many first-time homebuyers also fall into the trap of figuring out the most that they could afford to spend on a new home, then spending exactly that amount. The reasoning behind this decision is simple: money spent to repay a mortgage isn’t really “spent.” Homes can be refinanced or remortgaged if money gets tight, or repaid when the house is sold. People who end up spending most of their monthly income on a house payment leave little for other debt repayment, retirement savings or building an emergency fund. They find themselves unprepared for an unexpected medical bill or car repair. They also find it difficult to take vacations or make home improvements.
It’s important to understand that your upper limit for housing expenses should only be a worst-case scenario. Buy the house you need, not the most expensive house you can afford. You will be happier in your home and in your budget.
Don’t go it alone
Plenty of big national lending institutions advertise appealing mortgage specials on billboards, TV and the radio. The rates may seem reasonable and even enticing. In reality, though, those rates go only to a small percentage of borrowers – borrowers who have exceptional credit, significant income and a considerable net worth. Make your first stop the credit union that has the best chance of giving you the best rates from the start. SeaComm is there to help your community, and that includes helping new homebuyers secure loans for the first time.
SeaComm has partnered with the Federal Home Loan Bank in offering down payment and closing cost assistance of up to $14,500 to qualified homebuyers! The Homebuyer Dream Program™ is a grant that makes funds available to first-time homebuyers earning at or below 80% of the Area Median Income. If you haven’t been able to save for a down payment or don’t have enough set aside to purchase the home of your dreams, this is the perfect opportunity for you! The next round of the Homebuyer Dream Program™ will be open in May 2021. There will be at least four offerings throughout the spring and summer. Call us at (800) 764-0566 or click here to access our online Mortgage Center!