Good advice for first-time homebuyers
For people with good jobs and strong credit, today’s real estate market is an attractive option — with low mortgage interest rates and continued affordability. However, some buyers, especially first-time buyers, are struggling to enter the market and don’t always find the homebuying process as easy.
According to the National Association of Realtors, the percentage of sales to first-time homebuyers fell to 34 percent from 35 percent in 2016 — the fourth lowest share since 1981.
Several factors are making it difficult for first-time buyers to purchase a home. Low inventory, increasing prices and higher mortgage interest rates are some of the factors hindering first-time buyers in the Santa Fe market. Traditionally, first-time buyers are instrumental in housing recoveries because they help existing homeowners sell and trade up. It’s therefore important to make sure first-time buyers who are willing and able to purchase a home have the opportunity to do so.
The housing inventory in the past year has fallen to historic lows in Santa Fe and many other areas of the country. There is particularly a widespread shortage of homes in the lower price ranges. Home prices have been increasing over the past few years, and mortgage interest rates are expected to increase in the year ahead. Additionally, tight credit restrictions are preventing some qualified first-time buyers, who typically make smaller down payments, from becoming homeowners.
Student debt has been cited as a serious obstacle to owning a home for first-time buyers. A National Association of Realtors survey showed that of the first-time buyers who said it was difficult to save for a down payment, 54 percent said student loans made it tough to save money.
With these challenges, it’s easy for prospective first-time homebuyers to feel confused and hesitant. Here are a few tips from the National Association of Realtors:
• Review your finances. Before beginning the home search process, buyers should determine what they can afford. Carefully evaluate your income, savings and credit report. Also collect documentation of income and cash available to prepare for the mortgage application process. First-time home buyers should not forget other costs such as taxes, insurance and utilities when calculating a budget.
• Determine your wish list. Once preapproved for a loan, buyers should consider what they need and want in a home. Whether it’s a certain number of bedrooms, a large kitchen, or to be close to schools or public transportation, it’s good to have an idea of what you’re looking for. Realtor.com is a great resource for buyers who want to find accurate, up-to-date listings in their area. Visiting open houses is also another good way to get a sense of what is currently available and fits the budget.
• Work with a Realtor. The Santa Fe Association of Realtors reminds first-time buyers that it’s important to work with a Realtor who is familiar with your desired community. A Realtor can provide valuable counsel, discuss listings, show you homes in person, negotiate on your behalf and help you stay focused on the emotional and financial issues that are most important.
Rubel “Paco” Arguello, chief executive of the Santa Fe Association of Realtors, can be reached at firstname.lastname@example.org.