First-Time Buyers
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Helping 1st time homebuyers is probably one of the most rewarding aspects of my job. It’s exciting to assist people in purchasing their first home, to educate them on the process and to share with them their pride in ownership. It isn’t called the “American Dream” for nothing.
If you’re currently renting, making that initial decision to purchase a home can be very daunting. So daunting, in fact, it can lead a lot of people into inaction and accepting things as they are for a while longer. It’s easy to procrastinate when the thing you know you need to do looks like such a massive mountain.
My efforts here are aimed at turning that mountain into a mole hill. If you’re reading this, you’ve already come pretty far. You obviously understand that knowledge is empowering and can help overcome most obstacles. Fear is something easily conquered by knowledge. That’s why I created this web site, to educate and help people make informed decisions.
For a complete run down of the homebuying process and information to remove the mystery and intimidation factors, check out Buying 101.
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Top Excuses People Use for Not Buying a Home…
1) “But I Can’t Afford a Mortgage…”
Some Renters argue that they can’t afford a mortgage. In their minds, the word ‘mortgage’ is synonymous with ‘unaffordable’. Well, it’s not. Keep in mind, if you’re renting a house, you are technically already paying a mortgage…only it’s someone else’s – your landlord’s. So why help someone else pay off their mortgage when you can be doing the same for yourself. If you’re living in an apartment complex, you are simply feeding the profit mills of some company or corporate entity.
Other Renters make that affordability argument because they have their sites set outside of their budget. They have their dream home in mind and won’t settle for anything less. It’s almost as if they are creating their own obstacles by setting their sights so high, they couldn’t possibly reach it. But it’s just an excuse… and it helps them justify their current position as a renter.
The nice thing about real estate is that, if bought wisely, it appreciates.
Unlike a car that drops in value the minute you drive it off the lot, homes increase in value. According to the National Association of REALTORS®, the average national annual appreciation rate for homes is 3% – 5%.
So for those who argue that they can’t afford a home right now, talk to a lender and confirm it – you may be pleasantly surprised to find that you CAN afford the home you want through the many financing options available even in these tougher economic times.
If you find you still can’t afford the home you want, then compromise and look for one you CAN afford.
Word of advice: Don’t look at the purchase as a permanent one, but rather as an investment to help you build wealth towards your dream home. As you live in this home and the value appreciates, you can sell it and upgrade into a larger or better home. It may take a several years to accomplish but these are constructive years building towards something important. Renting for those same years will have gotten you absolutely nowhere.
Even the government is on your side on this… see below for more info on tax exemptions!
2) “I Don’t Have Enough for a Down Payment…”
For years, the standard was 20% down payment required to purchase a home. So much so that even today, many intelligent, well-informed adults living in this country still think this is so.
Welcome to the 21st Century!
Today, even with the instability in the mortgage market, there are still plenty of loan programs out there for almost everyone. It is, however, more important than ever to have good credit as lenders are wary of risk. This is why I cannot stress enough the importance of speaking with a mortgage lender. (See Buying 101)
Did you know:
…there are even gift programs out there where the Seller or other outside parties can help you with the down payment – something unheard of just a few years ago!
…depending on your credit rating, application processes are much shorter and quicker than in the past, often with only hours to turn-around! No more waiting on pins and needles for days waiting for the loan decision!
…there are federally insured and guaranteed programs out there (FHA & VA) that offer low to no down payments? These had sort of fallen out of favor in the past few years when conventional loans were offering similar programs. With the current mortgage crisis, many lenders have pulled away from the risk of low downpayment loans but these government programs are still available. So don’t overlook FHA loans… and if you are in the military or are a veteran, you may qualify for a VA loan!
The best thing you can do for yourself is to get informed. Don’t assume anything. Even if you’ve had credit trouble, it may not be as bad as you think! We talk with Mortgage Lenders every day and we hear the same thing from all of them, credit problems don’t have to be a problem…
3) “But I Won’t Be Staying Long…”
This sounds like a valid excuse…in fact I’ve used this same one, myself, the entire time I lived in Atlanta…for 6 1/2 years.
Did you know that the average home-owner moves every 3-5 years? The general rule of thumb if you’re buying or selling is that you stay put for at least 2 years for tax purposes.
According to current Federal Income Tax laws, if you’ve lived in a home for at least 2 years (or 2 out of 5 years of ownership), you can claim up to $250,000 ($500,000 per couple) in exemptions on capital gains taxes from the sale of that home. For most people, $250,000 or $500,000 will more than cover their tax needs. These laws are designed to allow people to repeatedly buy and sell homes without penalty, unlike laws from the past.
This, of course, is really important if you’re expecting sizable profits from the sale of your home. If you live in a rapidly appreciating area, this is very important when considering a short term purchase.
