Question’s Answered For First Time Real Estate Buyers Article

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Question’s Answered For First Time Real Estate Buyers

First time home buyers often have a slew of questions about the purchase of real estate. It’s a huge financial step as well as a long term commitment. It’s one of the largest financial maneuvers made by the average citizen.

Author: Andrew Stratton

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Purchasing your first piece of real estate can be both exciting and scary. It’s a huge financial step as well as a long term commitment. It’s one of the largest financial maneuvers made by the average citizen. Here are some answers to some of the more typical questions asked by the novice home buyer.

1. Why should I purchase rather than rent? There has always been debate about this question and especially in today’s uncertain economy. One of the main reasons to purchase a home rather than continuing to rent is that the mortgage check written every month goes toward purchasing an asset for the homeowner. A rent check goes toward purchasing an asset for the landlord. There are tax advantages to purchasing real estate, as well. A homeowner can write off several expenses in order to reduce their annual tax debt.

2. Should I use a real estate agent? A real estate agent has much experience and skill on their side that can greatly benefit a home buyer. A novice homebuyer will especially need a bit of guidance in terms of where to look, what to get, how to handle the mortgage paperwork. It may seem like it would be cheaper to skip an agent’s commission, but a seasoned realtor will have enough expertise to save his or her clients money in the long run.

3. How much money should the buyer be prepared to come up with in order to purchase a home? A down payment will be required as well as closing costs. The amount of a down payment will vary depending on the type of loan. The range can most usually be from 2% to 20%. There are federal programs that will help first time home purchasers so that they have a smaller down payment, but larger down payments are in the favor of everyone. The larger the down payment, the more equity a homeowner has from the very beginning. Mortgage companies feel safer loaning money to homeowners who have saved enough cash for a substantial down payment, as well.

4. What is the common length of a mortgage? One of the most common mortgage lengths is thirty years. The next most common mortgage length is fifteen years. It is wise to have the shortest term that can be afforded in order to save on the interest. It's also wise to not stretch the personal budget too far. A prospective buyer should only look at homes in a price range that is truly affordable.

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