Although there are many good reasons to buy a home, wealth building ranks among the top of the list. However, too often, people talk themselves out of making one of the best financial decision of their lives for reasons that when fully examined just don't make much sense. Listed here are the most common fears that might keep some first-time home buyers from making the transition from renter to homeowner, along with the facts that will push you past them.
Fear #1: I can't afford to buy a home now.
Fact: Actually, you can't afford not to buy a home now.
If you are paying rent, you can afford to buy. From a financial point of view, in the U.S., the tax savings on mortgage interest alone usually makes up most of the difference between rent and a mortgage payment. Also, the earlier you buy, the earlier you will benefit from equity buildup and will be well-positioned for any future appreciation
Fear #2: I should wait until the real estate market gets better.
Fact: There is never a wrong time to buy the right home.
Historically, focusing on the market is never the smart approach to buying the right home. Trying to time the market in the short term is the easiest way to miss your timing for the long term. Keep in mind, it's the long term factors that make real estate a solid investment. Mortgage rates averaged 4.45% in 2011-- an all time low since Freddie Mac started tracking in 1971 making housing affordability the most favorable on record (just 12.9% of family household income!) All you need to do in the short run is find a good buy and make sure you have the financial ability to hold it for the long run.
Fear #3: I don't have money for the down payment.
Fact: There are a wide variety of down payment options available for you.
While many people believe that making a home purchase requires a substantial down payment, this is seldom true. As a first-time buyer, options are available to you that require as little as 3.5%, and some even less. In our area, 100% financing is still an option for homebuyers who qualify for a CHFA loan. Don't let the lack of a large down payment prevent you from investigating your home-purchasing opportunitites.
Fear #4: I can't buy a home because my credit isn't very good.
Fact: A less than perfect credit score won't necessarily prevent you from buying a home.
Typically, there are two types of credit challenges-- a poor credit history or no credit history. A poor one shouldn't prevent you from talking to several lenders to explore your options. A good loan officer will be able to help you resolve your credit challenges. With proper credit planning over time, you'll get on the path to home ownership.
Another challenge is having no credit history because you are new to the workforce or have not made regular purchases on credit. One avenue for first-time home buyers is to secure financing with the help of a co-signer, such as a parent, who is willing to stand by your ability to make the payments.
Fear #5: I can't afford to buy my dream home.
Fact: The best way to get closer to buying your dream home is to buy your first home.
Very few people can afford to buy their dream home when they buy their first home. So you make some compromises, buy your first home, and start building equity. This approach take you further and faster down the road to being able to own your dream home than if you hadn't purchased a home at all.
Fear #6: I should wait to buy a home until I get married.
Fact: There is no reason to wait.
When most people say they want to wait until they're married to buy their first home,, what they're actually struggling with are two distinct issue: First, would it be better to wait until they had two incomes? And second, will my futufre spouse like the home I choose?
If marriage is in your future, then getting into the game as soon as possible the right decision. If your future spouse doesn't like the home, you can rent it or sell it and use the proceeds along with your possible dual income to buy one you both like.
Fear #7: Buying a home seems way too complicated.
Fact: Buying a home is way too complicated, but that's why you have help.
No one would ever tell you that buying a home is easy. It's not. That's why there is a team of professionals ready to guide you through the home-buying process every step of the way. From your real estate agent to your mortgage officer to the professional who handles your closing and everyone in betewen, these experts make a complex process simple for you.
It's always a great time to buy a good piece of real estate! Contact me if you'd like to receive a free copy of Gary Keller's book, Your First Home for more great home buying tips!