First-Time Homebuyers Have an Edge
It's a great time to be a first-time homebuyer.
Housing prices have fallen steadily over the past few years, and first-time buyers have their pick of the housing market without having to sell their own homes. In fact, first-time buyers accounted for a bigger share of home purchases this year than the previous two years, according to the National Association of Realtors.
Still, buying your first home is a major financial decision. Understanding the dollars and cents of buying a house will give you a head start toward making a successful purchase.
Here are a few financial tips for buying your first home.Make a budget: Before buying a house, know what you can afford. A mortgage lender can help you figure this out, but it's a good idea to know how much of your monthly budget can go toward a mortgage payment. In general, your annual housing costs should eat up less than 30% of your income. If you make $50,000 a year, plan to spend $15,000 or less annually, or $1,250 a month, on housing. Bear in mind that figure includes your mortgage as well as any other housing costs, including property taxes and regular maintenance. These added costs can total 5% per year of your purchase price, and should all be figured into your monthly budget. For more on the hidden costs of homeownership, read here. Research a mortgage: The most popular types of mortgage is a fixed-rate mortgage (FRM), in which your interest rate doesn't change over the life of the loan. Nevertheless, some homebuyers opt for an adjustable-rate mortgage (ARM). ARMs often carry a fixed rate for a set number of years, after which your rate (and therefore your mortgage payments) will change each year. (For more on the difference between ARMs and FRMs, read here.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV