Tips for the First Time Homebuyer

First-time homebuyers – those who have no present home ownership – are some of the luckiest in the market today. In order to stimulate a sluggish housing market, there have been a handful of incentives and loan opportunities that encourage those without a home to buy, in turn stimulating a down economy. Since the housing bubble, the market has been most generous to new buyers thanks to low housing prices and historically low interest rates. The drawbacks have been that lenders have tightened their lending guidelines, and there is a low inventory of homes available.

Why Buy?

Homeownership offers many benefits:

• Increased control (no more cancelled leases)

• A residence that better meets your needs

• Home equity

• Tax benefits

• Builds credit

Below are a few tips for the first-time homebuyer.

• Check the selling prices of homes in your area. For the most accurate data, you’ll need to look at the MLS, so contact a real estate agent who can give you access to this up-to-date, real-time system.

• Use a mortgage calculator to determine how much you can afford each month. Overestimate your expenses so that you leave ample room to afford your mortgage and the hidden costs, such as HOA fees, property taxes and utility bills.

• Find out what property taxes will be. There are big differences from one county to the next. Unfortunately, no matter where you live in NJ, you can expect to pay high taxes.

• Determine how much closing costs will be. First-time homebuyers sometimes have more incentives than other buyers, so you may be able to get your closing costs paid for. Still, it’s not as common for these costs to be rolled into your loan as in years past, so know what you will have to bring to the table.

• Work with a reputable realtor. A realtor is your best guide during the home buying process and will match you with the best properties, while also keeping you up-to-date on fluctuating interest rates and taxes.

• Start the pre-approval process. A lender will look at your finances, qualify you based on your income and tell you how much home you can afford. Fannie Mae recommends that you spend no more than 28 percent of your income on housing, so take this into consideration. You want to afford your home, not make it a financial strain.