Is Now the Time to Buy Your First Home?

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Indications are that the home market is rebounding.  Interest rates are up slightly, though they are still very low, and housing prices are rebounding ever so slightly.  If you have been holding out for the perfect time to buy your first home, now might be the right time if you want to take advantage of low interest rates and lower home prices.

First home buyers should ask themselves several questions before jumping into the housing market.

How is my credit?  Before you start the process of buying a home, make sure you have good credit.  Generally, a higher credit score will get you a lower interest rate on your mortgage, which can save you tens of thousands of dollars over the life of your home loan.  If your credit is not at its best, consider delaying your home search until you improve your credit.

How much am I prequalified for?  Don’t begin home shopping without asking and answering, “How much can I borrow?”  Shopping for homes outside your price range is a waste of time and emotion.  Know your budget and shop for homes that you can afford.

How much home do I need?  In recent years, before the recession a few years ago, people had a tendency to buy more home than they needed.  They tended to buy up to the full limit they could borrow, which is not always a good idea.  Instead, decide how much home you need and what monthly payment you can comfortably afford.  If you have two incomes, you might even be more conservative and analyze how much you can afford on one income.  In the future, one of you may lose your job or decide to stay home with children.

What is the best school district?  Ask this question whether or not you have children.  If you do have children, of course you want them to have a good education and be in a good school district.  If you don’t have children, when you sell, you may sell to a family with children, and the home will sell faster in a good school district.

How much are the property taxes?  In some areas of the country, property taxes are modest, but in other areas, they can cost $10,000 to $12,000 a year, which adds an average of $1,000 more a month you must pay in addition to your monthly mortgage.  Make sure you can comfortably afford the property taxes.

Buying your first home is exciting.  Just make sure you take the proper steps financially so home ownership is a joy rather than a burden.

What other suggestions do you have for first-time home buyers?