Expert advice on navigating the housing market as a first-time buyer
Median price for an existing home is around $388,000, according to the National Association of Realtors
(InvestigateTV) — The National Association of Realtors (NAR) reported the median existing home price in April dropped 1.7% compared to the same time last year. However, experts say it’s still a frustrating time to buy.
Jeff Ostrowski, an analyst with Bankrate, explained that while home prices have been dropping, interest rates have been rising, which has resulted in higher mortgage payments.
“Yes, home prices have declined, but they haven’t really declined much,” Ostrowski said. “So, the cost of that house that you want to buy might be a little bit less than it was a year ago, but not significantly so.”
He said Bankrate found typical monthly mortgage payments are 35% higher than a year ago, which can be problematic for first-time homebuyers.
Ostrowski said this is the time to look closely at finances. It doesn’t make sense to buy if homeowners are not planning to stay in a location for five years or more.
A better plan, he said, would be to work on boosting credit scores and saving for a down payment.
He also urged buyers to save money beyond the down payment. Unexpected repairs, like heating and cooling systems or a broken hot water heater, could cause owners financial hardship if they are not prepared.
Bankrate has several tips for potential homebuyers:
- Be patient – look at local markets to determine the best time to buy
- Use a mortgage specialist or realtor to secure pre-approvals and funding
- Research state level programs for first-time homebuyers, if applicable
- Create a realistic budget, including costs outside of mortgage payments such as utilities, insurance, etc.
Bankrate also has a 13-step guide for the homebuying process.
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