So you’ve decided to purchase your first home. Congratulations! Purchasing a home is a huge decision, and it can be one of the most exciting and rewarding experiences of your life.
But purchasing a home requires capital, and if your savings account is looking a little trim, it means that you will have to do some budgeting in the upcoming year to make your dream of being a homeowner a reality.
Here are 7 budgeting tips to help you buy your first home:
1. Track Everything You Spend
You will not be able to make any major changes to your budget if you don’t have a firm understanding of how your money is being spent. Tracking everything you spend for a month will show you exactly how much you’re spending, where you’re spending it, how much of your budget is going towards necessities and how much of your budget is going towards luxuries.
You can keep track of all of your expenses in a spreadsheet, but a better strategy is to use a spending tracker like Mint or Prosper Daily (formerly BillGuard). These apps link to all of your accounts and will track and categorize your spending, making it easy to visualize where your money is going.
2. Identify Areas To Cut Back
Once you know where your money is going, it’s time to identify the areas where you can cut back and save additional funds to put towards your down payment. Every household will be different, but when you’re saving for a house, anything that’s not a necessity (like rent or medical insurance) should be considered an area where you can cut back.
Things like eating out, daily Starbucks and an expensive gym membership are great,...
Buying your first home can be one of the most exciting experiences of your life. But it can also be one of the scariest.
Buying real estate is a complicated process. And if you’ve never purchased a home before, the fear of all those unknown variables can make the experience stressful, frustrating, and downright terrifying.
If you’re thinking about purchasing a home but are dealing with the fear that comes along with it, don’t worry! You’re not alone. Most first time home-buyers deal with a certain level of fear as they get ready to buy their first home.
But that fear doesn’t have to hold you back. Here are three of the most common fears of first time home-buyers (and how you can overcome them).
“I can’t afford to buy a home.”
The number one fear most first time home-buyers struggle with is the fear they can’t afford to buy a home.
But while there are certainly people who aren’t in the financial position to purchase a home, becoming a homeowner isn’t as expensive as you might think — and sometimes all it takes to be able to buy a home is a little budgeting.
If you’re worried about being able to afford a home, it’s time to take a good, hard look at your finances. Make a list of all of your monthly expenses and all of your debt. How much are you spending per month on living expenses? How does that compare to how much you’d be spending per month on living expenses if you were to purchase a home? How much are you saving each month? Are there any opportunities...
Because of the historic inventory shortage, competition for homes has been steep, and prices have been rising sharply in markets across the country as a result.
But according to a recent report, it looks like that's (finally) starting to change, spelling good news for buyers.
According to recent data from Zillow, 14% of all listings in the United States had a price cut in June 2018, and since the start of the year, the share of listings in the US that had a price cut increased by 1.2 percentage points—the largest January-to-June increase since Zillow started collecting data.
What does this mean? As the housing market starts to normalize (after years of leaning towards sellers), homeowners putting their properties on the market are having to adjust their prices in order to stay competitive—which is great news for buyers.
If you've been thinking about purchasing a home, now is a great time to make a move and take advantage of these price cuts.
If you've been on the fence about purchasing a home because you're unsure of the market, it might be time for you to take a cue from the majority.
According to the National Association of Realtors' most recent Housing Opportunities and Market Experience (HOME) Survey, nearly 70% of Americans believe that now is a good time to purchase a home. This buyer confidence is likely due to a number of factors, but one of the main factors at play is likely the upcoming increase in available inventory. According to a recent report on new construction from the US Census Bureau and the US Department of Housing and Urban Development, builders completed new homes at a record rate in May 2018 (a seasonally adjusted rate of nearly 1.3 million) and approved another 1.3 million building permits—which means a ton of new inventory is about to flood the market, making it significantly easier for potential buyers to find and purchase homes.
If you've been thinking about purchasing a home, it looks like it's time to make a move and take advantage of what 70% of Americans believe to be a good time to purchase property.
One of the main reasons people aren’t buying homes is they think they can’t afford it—especially the down payment. But, as it turns out, there are plenty of buyers out there who actually can afford to purchase a home, but their misconceptions about affordability are holding them back from making a move.
According to a recent survey from lender Laurel Road, 53% of Americans are concerned about their ability to afford a home. But a lot of that concern is because they don’t know what their options are.
A solid 58% of Americans surveyed said they planned to put down a 20% payment on a home, but 35% (and 46% of millennials) didn’t think they could afford to save that kind of down payment. But with alternative lending options, you don’t need 20% in order to buy a home! According to the National Association of Realtors, the median down-payment for first-time buyers is at 6%—significantly less than the 20% the majority of Americans believe they need in order to purchase a home.
Your misconception about how much you need for a down payment could be holding you back from purchasing property. Explore the alternative loan options available to you and make your dream of owning a home a reality!
If you consider buying a new construction home, there’s a good chance you’ll question whether or not you even need to use a real estate agent.
You might even wonder if there’s an advantage to not using a real estate agent…perhaps thinking you can get a lower price, or more upgrades thrown in, if the builder isn’t paying a real estate agent their commission.
Or, you just might not give it any thought whatsoever, and stumble into buying your new construction home, without having your own real estate agent to represent you.
So, do you need to use a real estate agent when buying new construction?
Should you? Yes.
Beyond Just Signing A Little Paperwork
One reason people question whether an agent is necessary, is because many tend to see it as an agent just signing some paperwork so they can get a commission.
There are certainly agents out there who don’t bring a heck of a lot to the table in terms of expertise and skills. There are ones who literally just want to make sure they are in the room when you do the paperwork, so they can secure their commission.
Unfortunately, they give great agents a bad rap.
Those are not the type of agents you should hire if you are buying new construction. Or any house for that matter.
The purchase of a new construction home really isn’t any different in many ways than purchasing a resale home. The knowledge and skills of a good real estate agent go beyond the “finding” of your home, or doing some paperwork.
The Builder Is Not Your Ally
Not that every builder is evil, and out there trying to take advantage of you. But a builder is certainly going to be looking out for their best...
Thanks to the historic inventory shortage, it’s been tougher than ever for potential buyers to find a home. And if they do find a home that suits their needs, beating out the other buyers vying for the property has been tough as well.
Up until recently, the hyper-competitive market was starting to discourage potential homebuyers. In fact, in March 2018 the number of buyers requesting home tours dropped 1.4% nationally, and the number of buyers writing offers dropped nearly 2% (according to the Redfin Housing Demand Index).
However, according to the Demand Index, in April, newly listed homes for sale were up an impressive 6.6% year-over-year. It looks like the tides are (finally) starting to turn for potential homebuyers.
This increase in inventory should make it a bit easier out there for potential homebuyers. So if you've been thinking about purchasing a home, now is a great time to make a move.
It’s Sunday morning.
You’re scheduled to go out and see houses later on with your real estate agent. But it’s nasty outside. It’s beyond pouring. You can’t even imagine walking from the car into a house. You’d rather just cancel the appointment and hang inside, maybe watch some TV.
You can always go see the house next weekend.
But should you wait for next weekend?
Should you even wait to go see houses only during the weekend?
There’s five weekdays you can go see houses. Is there a better day than a Sunday?
What if someone else scoops up the house before you end up getting out to see it? Right?!
Sure. Totally a possibility. And, totally a reason to motivate and go see that house today in the rain.
But that’s not the point of this article. The point is that the best day to see a house is not necessarily Sunday. It’s also not necessarily not Sunday.
The best day to go see a house is when it’s raining. Even better if it’s raining heavily. And it’s best if it’s been raining for a few days straight.
It’s the future. You skipped going to see the house in the rain, but you ended up buying it eventually. Of course you had a home inspection done on the house during the process. But that was a sunny day, and it hadn’t rained in some time.
Then, after you’ve lived in the house for a while, you start to notice a drip in the ceiling. Or some dampness in the basement. Or worse, actual water on the basement floor.
You’d probably be pretty upset. You’d feel like the owner should’ve disclosed it. You feel like there’s no way they didn’t...
There’s no denying that it’s tough out there for buyers. The inventory shortage has created a market that’s more competitive than normal. As a potential buyer, you might be thinking “I should probably wait until next year to make a move.”
But if you want to get the best deal on a home, you should probably rethink that idea.
According to the most recent US Home Price Insights from CoreLogic, home prices are expected to rise 5.7% year-over-year—meaning a house you might be considering buying today will be 5.7% more expensive if you wait until this time next year to make a purchase.
What does that look like? Let’s say the house you’re considering making an offer on today is priced at $275,000. With a 5.7% increase, at this time next year that same house is projected to be listed at $290,675—$15,675 more than you’d pay today.
Not only are home prices projected to go up, but so are mortgage rates; Freddie Mac predicts that by the end of 2018, mortgage rates will increase an entire percentage point year-over-year—which will only make buying a home more expensive.
If you’re waiting to buy a home in the hopes it will be affordable next year, do yourself (and your wallet) a favor—stop waiting and make a purchase.
Some potential buyers face roadblocks on the road to homeownership. But according to a recent report from Urban Institute, many of those roadblocks are self-created in the form of misconceptions about what it takes to purchase a home.
According to the report, a whopping 80% of are either unaware of how much is required for a down payment or believe they need to save 5% or more of the total purchase price in order to make a purchase (with 50% believing a lender either expects or requires a 20% down payment in order to approve a mortgage).
This information, of course, is false. There are plenty of lenders out there that will approve loans with either no or an extremely low down payment (in fact, according to the National Association of Realtors' Realtors Confidence® Index , 61% of first-time buyers in 2017 made a down payment of 6% or less.)
With so many potential buyers out there operating with false information, it's no wonder so many renters (53%, according to the Urban Institute Report) consider saving for a down payment a major obstacle on the way to homeownership.
If you're considering buying a home but holding back because you don't think you can afford a down payment, do some research. Look for no or low interest payment lending options like FHA loans. The reality of owning a home might be closer (and more affordable)...
It's been a tough market out there for buyers. According to the recent Housing Shortage Report from Realtor.com, the United States is in the midst of its worst housing inventory shortage in over two decades.
But it looks like that might be changing.
According to the National Association of Realtors most recent Existing Home Sales Report, total housing inventory rose 4.1% from December to January, with 1.52 million homes for sale across the country. This is still lower inventory than January of last year, but it's a positive sign that the end of the housing shortage may be in sight.
Most experts predict mid-to-late 2018 should see major changes in the number of homes on the market. According to a recent article from Realtor.com's economics team, the second half of the year will see a major increase in inventory flooding the market thanks to new construction—which is great news for buyers.
The low inventory markets across the country have been experiencing has been a real challenge for buyers. But thankfully, it looks like the coming year is going to be a much friendlier environment for buyers looking to purchase a home.
Thanks to the timing of the 2008 financial crisis, millennials have a reputation as a generation that's laden with financial struggle. And while it definitely took some time for this younger generation (millennials are considered anyone 36 years or younger) to recover, if you're judging by the real estate data, it's safe to say that in 2018, millennials are doing just fine. According to the National Association of Realtors® Home Buyer and Seller Generational Trends Report, in 2017, millennials made up the largest share of homebuyers on the market at 34%, putting them well ahead of Gen Xers (28%) and Baby Boomers (Younger Boomers, aged 52 to 61, came in at 16%, while Older Boomers, aged 62 to 70, made up 14%). Out of that 34% of millennial buyers, 66% were buying a home for the first time, meaning more millennials are making the transition from the outrageously expensive rental market to a more long-term investment of owning a home. What's the reason for so many millennial buyers flooding the market? For one, renting has become so expensive, buying a home is often times the more affordable choice (according to a recent report from Zillow, renting is more expensive than owning in the majority of the US' major metro areas). And with a variety of non-traditional lending options on the market that require little or no down payment, buying a home is becoming more and more accessible for younger buyers.
Millennials, which is the generation comprised of people born from 1980 to 1998, are buying homes at a much lower rate than previous generations in favor of renting or moving back in with their parents after college. And a large reason they're not buying?
Because they believe they can't afford it. According to data from Apartment List, 72% of millennials say they can't afford to buy a home.
One of the major roadblocks millennials believe stands in their way to homeownership is the down payment. But many millennials are operating with incomplete or incorrect information about how to purchase a home. According to a Fannie Mae survey, 73% of millennials surveyed were unaware of lower down payment options (like the ability to pay 3% to 5% of the home's purchase price instead of the traditional 20%).
These lower down payment options are increasingly common in today's market. According to a recent NerdWallet report, 30% of all homebuyers put down 3% or less when purchasing a home.
If you're a millennial who's holding off on buying a home because you can't save for a 20% down payment, look into lower down payment options. Depending on your financial situation, owning a home may be more economical than renting... and if you go with a lower down payment loan, you won't have to come up with...
One of the biggest hurdles that potential buyers have to overcome on the road to homeownership is saving for a down payment. Traditionally, you needed a 20% down payment in order to secure a loan and purchase a property. And for many people dreaming of buying property, this large up-front investment put homeownership out of their reach.
But times have changed. Depending on your creditworthiness, you might not need a 20% down payment to purchase a home. In fact, in some cases you don't even need a 10% down payment. According to the National Association of Realtors' Realtors Confidence® Index, 61% of first-time buyers in 2017 made a down payment of 6% or less.
Low-down-payment mortgage options, like FHA loans, are making the possibility of homeownership a reality for a new generation of potential homeowners who have the financial means to manage their mortgage payments but don't have the ability to stash away 20% of the total cost before making a purchase.
If you've been putting off homeownership because you're worried your savings account can't support a hefty down payment, start talking to lenders. Even if you don't have any money to put towards a down payment, the possibility of owning a home is within your reach.