First-time home buyers should consider all the options

 

September 1, 2011

 

First-time home buyers may not want to look to hard for their dream home and 

consider all the options, according to MSN Real Estate. Buying a slightly older 

home can reduce the cost and be a gentler introduction into the responsibilities 

of homeownership.

 

This can allow the home buyer-turned-homeowner to build equity over time, putting 

him or her in a stable position from which to buy the home they intend to stay in 

for the long-term. It's also possible home buyers' circumstances will change in 

the years after making a first purchase, and having more flexibility may be 

helpful.

 

 

First-time homebuyers may be unfamiliar with the maintenance needs of a home. MSN Real Estate recommends budgeting 1 to 3 percent of the home's value for future 

repairs. Factors like inflation and the increased use of 401(k) and similar 

retirement plans has changed the financial outlook for individuals and families.

 

For example, many couples used to have only one full-time worker, which meant 

that if finances became strained the second could get a job to meet their 

changing needs. Now, most adults are working already.

 

A less expensive home or a condominium may help keep the mortgage manageable 

while building equity and gaining experience as a homeowner. Shorter mortgages 

may also decrease the total interest paid over time and pay down principal 

faster, decreasing the long-term financial effects. Additionally, a cheaper home 

will likely have a more affordable down payment than a dream home.

 

 

Starting small gives new homeowners a chance to learn what they need to know in a 

more tightly controlled situation, with more financial leeway to cover any 

unpredicted expenses. This may include expenses not directly related to owning a 

home.

 

MSN Real Estate points out first-time homebuyers are frequently at a stage of 

life where they may change jobs or have children, which can affect life in a 

variety of ways. If one member of a couple changes employment, for example, they 

may be paid more at their new job but be unable to use public transportation, 

requiring the lease or purchase of a car.

 

Waiting may also allow time for other debts to be paid off, improving the buyer's 

available finances and lenders' perception of the homebuyer to secure a better 

loan.