First Time Home Buyers
So, you want to buy your first home. This is the place to start! We can help you with some sound advice, a few tips for the journey, and additional information when you are ready for it.
Let's get started.
Why should you buy, instead of rent? Well, a home is an investment. When you rent, you write your monthly check and that money is gone forever. But when you own your home, you can deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes. This will save you a lot each year, because the interest you pay will make up most of your monthly payment in the first several years of your mortgage. You can also deduct the property taxes you pay as a homeowner. In addition, as you pay off your home, you build up equity. You don't get that with rent!
So, assuming you are already "sold" on the idea of buying a home, the next comforting fact is that there are many laws that protect you from scams, unnecessary expenses, and discrimination in the process of home buying. It pays for you to know your rights. You can find out about your rights at the website for HUD. HUD is the US department of Housing and Urban Development. They have lots of information on the laws that affect homebuyers, as well as helpful tips of various sorts.
Probably one of the most intimidating parts of buying a home is finding a lender and getting a mortgage. After all, this is normally the biggest debt you will have in your lifetime. If your credit rating is good, you have little to worry about. Lenders will be competing for your business.
However, be sure to be pre-approved for a mortgage before you do anything! This allows you to set your budget for house hunting. If you wait until after you've found the house of your dreams to find out how big a mortgage you could qualify for, you could easily be disappointed. Consider using a Mortgage Calculator in order to work out your payments in advance. After all, even if you qualify for a large mortgage, you may not want to be "house poor". Further, you provide yourself with more financial breathing room if you keep your mortgage payment very manageable, rather than getting the biggest house you can afford.
Keep in mind that interest rates, while low now, are on the rise. While we don't know if rates will rise significantly, it's best to plan for a worst-case scenario. If you buy a house that you can easily manage, you should have nothing to worry about in the future. Assuming that your income stays the same or goes up, you should continue to be able to make your mortgage payments, even if interest rates go up.
Need some money for that down payment? We've got a section on Grants for First Time Buyers. Want to look more carefully at the benefits of Buying vs. Renting? We've got info on that too. And consider that when you buy, you'll be there for a while and it will be harder to move. Check out our section on Meet the Neighbours.