You want to buy your first home, but you’re not sure what to do. I’ll introduce the seven most common fears home buyers have, and give you information you need to base your decision on facts and not fears.

1 – I can’t afford to buy a home.

If you are paying rent, you probably can afford to buy. In my previous article, I mentioned that one of the benefits of homeownership was tax savings on mortgage interest. This alone usually makes up the difference between rent and a mortgage payment. The way to find out is to contact a lender and see what you can afford.

If you can’t afford the exact home you have dreamed of, you may want to start with a smaller version of that dream and build equity. Equity is like money in the bank. Every time you make a house payment instead of paying rent, you are building equity. When you are ready to move up, you’ll be ready.

If you don’t believe there’s a home out there that you can afford, you may not be serious about looking. Keep searching yourself, or enlist the services of a professional Realtor®. You want an agent that cares and is willing to work with you until the time is right. Look at it this way, you can’t afford not to buy a home.

2 – Should I wait till the real estate market is better?

This might work if you can find a reputable fortune teller with a crystal ball. But, historically, trying to outsmart the real estate market has seldom worked in anyone’s favor. Real estate has proven to be a solid investment, a smart financial decision with long-term benefits. Ask most real estate investors (or stock market investors) who tried to make a quick buck. Quick buck investors rarely last.

If you purchase with the idea that your purchase is going to build equity, most likely appreciate in value, and you’ll have great tax benefits in the meantime, you are on the right track. And, you have a great place to live while that is happening. There’s really never a wrong time to buy the right home.

3 – I don’t have money for the down payment.

Years ago, individuals and families put down ten to twenty percent or more when buying, but that has changed dramatically. In past days interest rates of over 15 percent were the norm. They topped out at 18.5 percent and 17 percent was the average in 1981.  Putting large amounts down reduced the amount paid for the property and therefore reduced the total amount paid for interest.

For the last few years interest rates have been in the 3-4 percent range and there are a number of new financing choices available with down payments from 3.5 to 5 percent, and sometimes nothing down. Investigate your options and see what is best for you. And, remember, the longer that you delay, you are delaying the financial benefits of owning, which is probably costing you money.

4 – My credit scores aren’t good enough.

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Buyers face two challenges: either poor credit scores or no credit scores.  Don’t make assumptions that your credit is so bad that you can’t buy a home. Check with a lender and get the facts. You may be right and if so, your lender can steer you to the resources that can help.

The second challenge may be not having credit or having the wrong kind of credit. This can be the case for first-time homebuyers or prospective buyers who have experienced a short sale, foreclosure, or bankruptcy in the past and have not had good advice on how to build or rebuild credit that will meet a mortgage lender’s criteria.

Whether you decide to buy right away or wait, having good credit is in your favor. Today, many different organizations check credit and it may affect how much you pay for certain items or services, or even keep you from renting a car an apartment or getting hired for a job.

5 – I can’t afford to buy my dream home.

We are constantly being told today to Dream Big. Dreaming helps us change our frame of reference and believe something can be accomplished. So, we dream and conjure this amazing image of our someday dream home. Don’t get discouraged if you don’t have the money for that dream today. The easiest way to make someday a reality is to take action today. How do you get started?

Well, you can start putting a lot more money in a savings account, but with interest rates where they are today, there are much better solutions. Real estate is a solid investment, a smart financial decision with long-term benefits. Find the home that you can afford today and start building equity. If you find a great buy, you may already have equity on day one, but it is the sweat-equity that can really pay off. Make sure you keep your home well maintained and upgrade as you can. Look at ways that you can improve your property without spending a fortune so that it will increase in value faster than the norm. You don’t have to upgrade the whole bathroom or kitchen at one time. Buy new fixtures or appliances when you find them on sale and have them installed or read the latest Do It Yourself (DIY) book and save. Projects can be very satisfying, especially when you know they are part of your big-future-someday-dream-home plan. This approach will take you further and faster than if you just put money in the bank.

6 – Should I wait until I get married to buy a home?

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I bought my first home when I was twenty-five years old and single. At the time it was pretty unusual, but certainly not any more. Married couples, unmarried couples, blended families, singles that have never been married, people who are rebounding from a divorce or other situation, and even very close friends all buy homes. There’s a trend in college areas for parents to buy a home for their son or daughter and several of their friends. They’ve discovered the cost is much less than expensive on-campus housing, and they can keep renting to college students after theirs have graduated or sell it to the next parent. Basically, anyone who wants a good, smart investment is buying today.

7 – I’m afraid I’ll make a bad decision.

This is a valid fear. You may know a little about the process or have extensive knowledge in a specific area, but it’s rare for anyone to be an expert in all aspects of home buying. After twenty-six years as a Realtor®, I know I don’t know it all, but my expertise has taught me to know what I don’t know. Home buyers trying to navigate the market by themselves or buyers taking advice from inexperienced or part-time agents that aren’t familiar with market trends or neglect staying current with local rules and laws may not even know the questions they should be asking.

Hire professionals to guide you through the maze and make sure the ball isn’t dropped somewhere along the way wasting your time or causing financial loss or heartbreak when a deal falls through. You certainly don’t want to make a bad decision on one of the biggest purchases you will make in your life.

The opinions expressed in these articles are not necessarily those of Executive Life Magazine or the ACA Business Club. Answers are general in nature and do not apply to actual transactions.

 

[1] Yahoo Finance – Why Mortgage Rates Once Reached a Skyhigh 18.5% – https://finance.yahoo.com/blogs/just-explain-it/why-mortgage-rates-matter-152241574.html

[2] Credit.com – Could Your Credit Prevent You From Renting a Car? – http://blog.credit.com/2014/01/could-your-credit-prevent-you-from-renting-a-car-74117/

[3] Credit.com – Can You Be Denied an Apartment Because of Bad Credit? – http://blog.credit.com/2014/12/can-you-be-denied-an-apartment-because-of-bad-credit-103424/

[4] NOLO – Running Credit Checks on Job Applicants – http://www.nolo.com/legal-encyclopedia/running-credit-checks-applicants-35457.html