If you’re thinking about becoming a first time home buyer, you might be anxious to try to take advantage of the deflating real estate bubble that’s being talked about so much these days. While it’s true that there are many opportunities for first time home buyers right now, there are some important factors that you really need to consider before you take the plunge into home ownership.

Here are some things for potential first time home buyers to think about:

You’ll probably need a more sizable down payment. The days of “Zero Down” and “No Cash to Close” are virtually gone.  The are still a few loan programs that allow Zero Down, like a Veteran’s VA loan or Rurual Development.  However, special qualifications are required for these programs.  In most cases you can expect to put at least 3.5% down with FHA financing or 10% with Conventional financing.  To further minimize needed cash to close, the purchase offer should be structured properly to help offset additional monies needed for closing costs, prepaid taxes and insurance, as well as escrows.

Mortgage Underwriters are also far more picky. This “credit crunch” everyone has been talking about is a reality. Lenders are looking closer than ever at things like employment history, proof of income, source of funds, credit history, and of course, the condition and value of the home itself.

Even though home prices may continue to slide, no one is sure when prices are going to stop falling.  The bottom is best seen once your well past it.  It’s possible you may find that the ten percent you put down on a new home may be eroded (in the short term) by a continued drop in home values, perhaps even leaving you owing more than what the home is worth.

Eventually, home prices will come back up, but you should still make sure that you’re interested in this home for the long haul.  Historically, first time home buyers tend to move on to another home rather quickly.  Just make sure the home you buy can support your family’s growth for at least a few years to come.

If you’re considering the purchase of a home, I encourage you to connect with my team and I do a brief pre-approval to help make sure your goals, timing, and financial affairs are all aligned.  Proper preperation and guidance early on in the home buying process can ultimately save you time, money and frustration.

Would you like to be kept abreast of various Real Estate Investment opportunities?

In today’s beaten-down real estate market, I’m seeing great investment opportunities on a regular basis.  Perhaps it makes sense to diversify your total asset portfolio into asset classes other than stocks and bonds.  Sometimes we’re seeing “quick-flip” opportunities as well as “buy-and-hold” rental homes.

I’ll be posting more explicit information in the coming weeks.  Meanwhile, if you’re someone who might be interested in learning more, please just send me an email to Richard@TeamWitter.com or give me a call.

Richard Witter
Real Estate & Mortgage Consultant