Tag Archive for first time homebuyer

What if I Can’t Afford What I Want?

What if I can’t afford what I want?  As prices continue to rise, we hear this more and more from our first time home buyers.  You may want a certain number of bedrooms and bathrooms, but your price range may make it tough to accomplish this in the neighborhood you want to be in.

So what are my alternatives?  The first and maybe easiest way to accomplish this it to look at other property types.  For instance, if you are looking for a single family home but feel like they’re out of your price range, you could start looking at townhouses or condos.Two lawn chairs

But I’ve always wanted a yard.  We realize for some first time home buyers, a single family home is all they’re willing to consider.  The next possibility is moving outside your specific geographic area to see if outlying areas are more affordable.

But we have to stay in our existing school district!  Sometimes first time home buyers are absolutely NOT willing to look outside a specific area due to school zoning or other reasons.  A third option is considering a property that needs some cosmetic updates.

As long as I get the number of bedrooms/bathrooms I want.  It may even make sense to look at a home with LESS bedrooms and baths, as long as it has the potential to add these things later.  Many of our first time home buyers are considering starting families but don’t have them yet.  So a strategy could be looking at homes with unfinished basements, where you could add bedrooms and baths later.  The point is, when buying your first home it may make sense to think outside the box.

Don’t make the biggest financial decision of your life without getting educated!  If you’d like to learn more about the home buying process, please go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer workshops.

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What is the Mortgage Credit Certificate?

What is the Mortgage Credit Certificate?  The Mortgage Credit Certificate (MCC) is a dollar for dollar tax credit for first time home buyers.  The credit relates to the mortgage interest paid on a homeowner’s property over the life of their loan, as long as it remains owner occupied.

How does this differ from the standard interest deduction?  The first 20% of interest you pay on your mortgage will come back to you in a dollar for dollar tax credit.  The remaining 80% of interest paid will still be used to write down your income on your taxes as it normally does with owner occupied properties.

Can you give me an example?  Let’s pretend the Johnsons are first time home buyers and purchase their first home for $275,000.  We’ll also assume they will utilized FHA financing with a down payment of 3.5%, a fixed interest rate of 4.25%, and are in a 20% tax bracket.

Year #1…Total interest paid = $11,387
Annual property taxes = $2,750
Mortgage insurance paid = $3,619
Total paid in = $17,756

Annual tax savings = $3,551.20 or $295.93 per month

Annual refund with MCC = $5,372.80 or $447.73 per month

Does the MCC last for the life of my loan?  The MCC DOES last for the life of your loan as long as you’re occupying the property.  However, keep in mind that as time progresses, though your monthly mortgage payment may stay the same, more of your payment will go towards principle.  Therefore, your tax savings will slowly decrease because you are paying less and less interest every year.

The MCC sounds like a no brainer for first time home buyers!  The MCC is a fantastic program, but there are parameters you have to meet, as well as repercussions if you stop occupying the property.  Don’t make a decision without getting educated first!  If you’d like to learn more about the MCC go to our Calendar/Reservations page and sign up for our FREE First Time Home Buyer.

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First Time Home Buyer Market in Seattle

How’s the first time home buyer market doing in Seattle?  Competition is still STIFF.  Low inventory levels are still leading to multiple offer situations and even some bidding wars.  Months of inventory (essentially supply vs. demand) is at about 1 month for entry level housing in North Seattle.  Many other first time home buyer demographics are seeing similar trends, which means its a seller’s market in many places around the Greater Seattle area.

So when will it get better for first time home buyers?  In When Will We See More Listings?, we described a potential timeline for more listings coming on the market in the near future.  We’re still speculating that this may come to fruition in late spring/early summer of this year.  If this is the case, first time home buyers should have more to choose from in the next 4-6 months or so.

So should first time home buyers wait until there are more choices? 
In our past blog we also described some pros/cons for waiting.  There are numerous variables to consider such as appreciation levels, interest rates, life circumstances, etc.  It really just depends on your specific situation, so you should gather information based on YOUR goals, not necessarily what the media is covering in general.

Don’t make the biggest decision of your life without getting educated! 
If you’d like to learn more about first time home buyer inventory levels in your specific area, or about the home buying process in general, please go to our Calendar/Reservations page and sign up for one our FREE First Time Home Buyer workshops.

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First Time Home Buyers Should NEVER Buy at an Open House‏!

Why shouldn’t first time home buyers buy at an open house?  Open houses can be traps for first time home buyers.  You can OVER PAY.  You can end up with NO REPRESENTATION.  And you can end up with BUYER’S REMORSE.

Why would you over pay at an open house?  Especially in today’s market, open houses can be feeding frenzies for first time home buyers.  They are generally crawling with buyers, so even if no one else is interested in the house you may have the perception that it will be a bidding war and therefore end up offering more than necessary to get the house.

How do I make sure I have representation?  We’ve written past blogs about Who the Listing Agent Represents. Dual agency (working with the listing agent) is something you want to avoid like the PLAGUE, especially considering first time home buyers generally don’t have to pay for their OWN representation.

How do open houses increase buyer’s remorse?  Again, if there is a lot of activity at the open house, you may get emotional and make a snap decision.  This may lead to buyer’s remorse as you may have decided not to buy the house under different circumstances.

So how do I get inside the house?  All first time home buyers should hire a professional real estate agent.  This will ensure that they have their own representation and a professional looking out for their best interest.  Your real estate agent will schedule PRIVATE showings so you can view the home without the unnecessary duress of an open house.

Don’t make the biggest financial decision of your life without getting educated!  If you like to find out more about hiring a real estate agent or the home buying process in general, please go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer workshops.

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Is Winter a Good Time to House Hunt?

Is winter a good time to house hunt?  Many first time home buyers ask us when the best time to search for a home is.  The honest answer is, there can be pros and cons to shopping during any time of the season.  It really comes down to your personal situation.

Will I have less competition in the winter?  Many first time home buyers don’t want to house hunt during the holidays.  So if you’re willing to undertake your search during this time, you will most likely have less buyers to compete against.

Are there any down sides to shopping in the winter?  Absolutely!  Just as many first time home buyers don’t want to buy during the holidays, many sellers also don’t want to sell during the holidays.  So even though you may have less competition, you’ll probably also have less to chose from as well.

So when should I buy?  It really depends on your situation AND your specific housing market.  You should start looking for a home, when it makes sense for you.  Also, you should be consulting with a real estate professional about YOUR SPECIFIC MARKET!  It is possible to have less buyers and more sellers in the winter in one demographic, and the exact opposite ratios at the exact same time of year in another demographic.

Don’t make the biggest financial decision of your life without getting educated!  If you’d like to gather more information about when to buy in your area, or the home buying process in general please go to our Calendar/Reservations page and register for one of our FREE First Time Home Buyer workshops.

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