First Time Homebuyers: What They're Looking for and What They Need to Know

Now that the housing market is picking up once again, a growing number of first-time homebuyers are
jumping in, attracted by relatively low home prices in some areas and historically low mortgage interest
rates. In fact, many first time homebuyers have discovered that for the first time in years it’s actually
cheaper to own a home than it is to rent one.

The Joint Center for Housing Studies at Harvard recently reported that the median priced home in the
U.S. (when calculated in today’s dollars) is roughly half as much as it was in 1990! And as rents have
steadily risen in recent years, the Harvard study found that mortgage payments on the median U.S.
home is now 23 percent less than rent payments for the same home.

So as new buyers look to take advantage of this great opportunity, what are they looking for in their
first home – and what do they need to know about buying real estate for the first time? We thought it
would be interesting to take a look at the wants and needs of new buyers, as well as offer them some
tips as they enter the housing market.

What are new buyers looking for in a starter home? In a survey of 300 consumers who purchased their
first home in the last year, Coldwell Banker found that the vast majority wanted a move-in ready
home near work and good schools. Specifically: 

  • 87 percent said finding a move-in ready home was important or very important to them;
  • 78 percent said they wanted the home to be convenient to shops and services;
  • 75 percent said they wanted to be near their job;
  • 66 percent chose proximity to highly rated schools;
  • 61 percent noted they wanted to be close to extended family;
  • 61 percent said they preferred having lots of open space nearby;
  • 51 percent cited the importance of a lively neighborhood with
    restaurants and nightlife;
  • 45 percent wanted accessibility to public transportation; 
  • 36 percent said being near recreational venues like golf was important; 
  • 36 percent preferred being close to galleries, museums and theaters;

According to a recent survey from the National Association of Realtors, seven out of 10 renters say
owning a home is a top priority.

If first time homebuyers are trying to decide whether buying a home is the right decision for 
them, there are a couple of things they should consider.

At or near the top of every potential homebuyer’s mind is whether or not they can afford to buy a
home right now. Buying a home remains a sound financial decision for those with documented income
and a good credit history, and a steady income can provide a strong backbone for the initial down
payment and future mortgage payments.

Also, potential buyers should consider what their other options are and make a cost comparison. 
For renters, calculating month-to-month housing expenses is as easy as inquiring about the monthly
rent and average utilities. The calculation gets a bit more complicated when considering the
monthly cost of owning a home.

A real estate professional and a mortgage broker can help a first-time buyer understand the range of
financial considerations including annual property taxes.

While buying a home today is a great value compared to renting, there are a number of additional
costs that come with homeownership. All buyers need to be aware of these expenses and to incorporate
those costs into a budget.

Some of these expenses can be planned for in advance, while others may require homeowners to set
aside funds each month to cover their needs. Here are a few important ones to keep in mind: 

Furniture 
Homes can appear smaller than they actually are when individuals are visiting an open house. This is
primarily because the house is full of furniture, accent pieces and accessories. But when first-time
homeowners relocate from a one or two-bedroom apartment to a home, they may find that they don’t
have enough furniture to fill the place. Owners can keep their costs low by picking up accent pieces
here and there, rather than all at once. In addition, purchasing furniture from warehouse factories,
collecting trinkets and accessories from yard sales and shopping for used items online can help buyers
find pieces that appeal to their tastes without breaking the bank.

Property insurance
New homeowners will want to protect their assets by providing sufficient insurance coverage. It’s
crucial to shop around for an affordable plan that adequately covers all of a homeowner’s needs.
Insurance experts urge owners to choose a policy that covers rebuilding costs, rather than the initial
purchase price or value of their home. In addition, homeowners should read the policy carefully to
make a determination about purchasing additional coverage for disasters or scenarios their standard
policy may not cover. 

Maintenance
Properly maintaining a home, such as cleaning the roof, ensuring the wiring and structure is sound
and replacing appliances can be expensive over the years. It is important to realize that maintenance
can be financially rewarding in the long run, as it may help avoid structural, water and electrical
damage.

Utility Bills
The costs of electric bills, water, heat and air conditioning can run significantly higher in a home
than an apartment. It may take homeowners some time to determine how often to actually run 
the heating and air conditioning and get into the practice of turning off lights and appliances when
they are not in use to keep utility costs low.

Buying your first home can be an exciting endeavor, but it’s a big step and thus first-timers will have
lots of questions. That’s where I can help as a professional Realtor. Don’t hesitate to contact me
even before you’re ready to buy a home. I can answer questions about the process and help
new buyers find that perfect starter home when they’re ready to move forward.

[via Reality Check


Janice Lee
415-832-9151
International President’s Circle
Top Producer, Realtor
Investment Consultant
TRI Coldwell Banker
DRE #01720205

Comments

  1. Homeownership certainly comes with great financial responsibilities. Some people forget to take that into account and that could spell trouble. If your mortgage payments are going up faster than your income, you're just going to rack up a bigger debt or even lose the property in the event of default or foreclosure.

    Regards,
    Chris from 123homeloans.co.za

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