First-Time Home Buyers Budget

The past several months soaring housing prices has brought double-digit gains and locked out many home buyers.  This is especially true for first-time home buyers and caused them to stretch their budgets to a dangerous level.  By August 2021 per National Association of Realtors (NAR) median home price for existing homes reached $356,700.  This is an increase of 15% from prior year.  Recently, there has been increase of inventory on the market, but first-time home buyers are still finding it difficult to afford these higher home prices so they can become homeowners.  Per NAR, this past year first-time home buyers comprised 29% of the market while they normally comprise about 40% of the market.  This is forcing first-time home buyers to pay closer attention to their budget to determine whether they can afford home ownership.  Over extending can lead to regret and financial hardship.  Regrets may be cause by high cost of maintenance, mortgage, and other miscellaneous cost.  First, a first-time home needs to create a conservative budget knowing they will experience some unplanned expenses as they move forward.  Developing a budget, need to factor in down payment, closing cost, property taxes, homeowners insurance, association fees, utilities, and maintenance.  Additionally, need to think about periodically updating their property and how much they may want to spend.  Some home buyers waive getting an inspection when purchasing their new home.  Be aware this could be a mistake; this could result in expenses that you could have avoided.  Finally, get an estimated closing statement from your lender immediately after you sign a contract to purchase your new home.  This should include closing cost and prepaid expenses that you will be required to bring cash to the closing table.