What Are the Best Options for Today’s First-Time Homebuyers?

If you’re looking to buy your first home, you’re likely balancing several factors. Because both mortgage rates and home prices have risen this year, it costs more to buy a home than it did even just a few months ago. But that doesn’t mean you have to put your plans on hold.

 If you partner with a trusted real estate advisor and hone your strategy, you can navigate today’s market and find the home you’re looking for. Here are two tips to help you get started.

Work with a Professional To Prioritize Your Wish List

If you’re having trouble finding a home in your budget that checks all the boxes, it may be worth taking another look at your lists of what you want and what you really need. According to the latest First-Time Homebuyer Metro Affordability Report from NerdWallet, your wish list can have as much impact on your search as your finances:

 “Your budget isn’t all that you need to be concerned about; your wish list and desired location may carry just as much weight.”

 It’s all about prioritization. If you’re serious about purchasing your first home soon, be flexible in what you're looking for to open up your pool of options. Partner with a local real estate professional to better understand what’s available in today’s market and reprioritize your wish list. Remember, making a concession now doesn’t mean you’ll never have everything on your list. After you’ve moved in, you can always add certain features to make the home your own.

We asked The Ellingson Team, JJ and Alex, to weigh in: 

It's also important to note that with rising interest rates, it’s more important than ever to work with a real estate loan professional to help determine whether buying or renting is the right move for you." - JJ Ellingson

"Your first home purchase is a stepping stone to your dream home. Getting into the game now allows you to start building equity today instead of waiting for 2 to 3 years. Dream homes are made, not found." - Alex Gripp 

Consider these strategies to increase the affordability of buying your first home: 

  • Down payment assistance options. It’s realistic to buy with little to no money down.
  • Adjustable-rate mortgages. They provide lower rate options compared to 30-year fixed rates. The rate can be fixed up to 15 years, providing stability and affordability.
  • Expanding your search parameters.
  • Putting less money down to pay off higher installment or credit card debt.

Consider these tips to navigate making a buying decision in today’s market:

  • Review a custom rent vs. own with your lender.
  • Get pre-approved and meet with your lender to understand your options.
  • Evaluate what you truly NEED in housing versus what you WANT. Eliminating some of the wants could provide a more affordable price point.

Rates have increased, but some key benefits of buying vs. renting remain the same:

  • Buying provides tax advantages.
  • Buying creates long-term wealth accumulation.
  • Buying can provide rental investment income.
  • Buying provides security and stability.
  • Buying can be equal to or cheaper than renting.
  • Buying gives you a real estate asset.

Increase Your Search Radius To Consider More Locations

Some areas may have more homes within your target price range than others, but it may require you to be flexible on your location. For example, if you’re a remote worker, you may be able to expand your search radius. As Fannie Mae explains:

 “. . . continued remote work flexibility is likely giving many the ability to live farther away in more affordable areas."

 The decision to search in places with a lower cost of living could help you find a home that fits your budget and checks the most boxes off your wish list.

Bottom Line

If you’re serious about purchasing your first home this year, revisiting your wish list and desired location can help. Let’s connect to explore all the options in our local market – and beyond – so you can achieve your homeownership dreams.

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