Buy or rent?
Most people live in rented housing before they purchase a home. There are several factors you need to consider to decide whether to buy or continue to rent:
Advantages of renting
Flexibility – it is easy to get into a rental contract, and most of them are for a year, you can therefore terminate it at the end of the lease term and move to another town. By contrast selling your house if you have to move may not be easy especially in the current market conditions (2007 -2008)
Advantages of buying
A home is a secure long term investment. You are probably thinking I wrote this before the 2007 – 2008 housing market crisis. There are distortions in the market, created by speculative investors and aggressive lenders that have led to this crisis. The market is going through a correction, and there is going to be casualties, but at the end with all the attention given to this crisis by the Federal government the housing slump may bottom up probably in the 2008 – 2009 period. Historical data shows that besides the occasional housing market slumps, property values go up overtime.
Advice for first time home buyers
Just because you are a first time home buyer does not mean you can not be choosy. When you are looking for your first home, make a list of the criteria of utmost importance and do your best to stick to it. First time home buying is stressful but if you prepare yourself with a good plan, a good real estate agent and a list of what is important to you and on what you are willing to compromise, you'll find a starter dream home that really fits the bill.
Reasons to Use a Real Estate Agent as a First Time Home Buyer
Why should you use a real estate agent as a first time home buyer? They have the professional knowledge and experience to find you the home you've always dreamed of. Here are some basic reasons why using a real estate agent as a first time home buyer is a good idea:
Are you worried about coming up with a down payment as a first time homebuyer? There are many programs out there that are specifically designed to help with this very concern. Several programs require little or no money down. Did you know the federal government even allows for a one time withdrawal, up to $10,000, from an IRA or retirement account with no penalty for first time home buying? It is hard to decide between the various mortgage programs out there, which is why you need to develop a relationship with your mortgage broker. They can help you find the right first time homebuyer program for you and explain all of your options thoroughly.
Getting Your First Home Mortgage
If you are ready to start your first time home buying process, make sure you educate yourself on your options and do not just depend on the advice of others. For instance, first time home buyers are often entitled to special government funded mortgage programs that have low interest rates and low down payments. If you arm yourself with knowledge, you can explore all the options you have.
What do you need to look for in a mortgage program as a first time home buyer? Here are a couple of tips and guidelines:
Why are mortgage applications so painstaking, long and detailed?
You are borrowing a huge amount of money here, and they want to make sure they know everything about you. Here are the most important things on which to focus during the mortgage application process.
Credit History – First, you should know exactly what is on your credit report and what your credit score is before you fill out a mortgage application. They will pull your credit report but sometimes, if a loan has been paid off and not yet removed, they will need explanations about debts that show up. Accurately report your expenses and payments. They calculate what you can really afford, do not lie to get more than you can afford, let your lender guide you on what will be feasible for your budget.
The Housing Ratio (typically 28%) is the percentage of your income a lender will allow you to use for housing expenses. If your gross monthly income is $5,000 and the Housing Ratio is 28, then the lender will allow you 28% of the $5,000 for housing expenses when you qualify for a mortgage loan. 28% of $5,000 is $1,400.