Tag Archives: first time home buyers

4 Tips to Avoiding First Time Home Buying Mistakes

Earth-conscious homebuyersBuying a home is likely the biggest financial decision you’ll make. What should first time home buyers know before getting started? The Equifax Finance blog real estate pros came up with a list of four things every first time buyer should know to help avoid common first time buyer pitfalls/mistakes, in the recent article, “

First-Time Homebuyers: The Four Mistakes You Need to Avoid.”

  • Know Your Credit Score: If you have a bad credit score, you’re wasting time (unless of course you have the funds to buy a home in cash — which is unlikely). Without a decent score, you won’t be able to get financing for a mortgage. Knowing your score in advance will set you up for making decisions about whether or not to buy, and what kind of lending terms and interest rates you can expect. Check your credit for free three times a year from the three major credit reporting agencies (TransUnion, Experian and Equifax) and make smart credit decisions, like paying bills on time to keep your score up.
  • Get Pre-Qualified: Getting pre-qualified early in the process will not only let you know how much you can afford, it will set you apart from other buyers who are less serious and/or may not be able to get the financing that they want. Getting pre-qualified not only helps you, but it helps your agent and sellers, as it signals to them that you are ready and able to buy.
  • Know Home Values and Prices: Knowing the home values and prices in the areas you’re looking will arm you with the knowledge to be a savvy shopper and get the best deals. You can and should look up prices of homes for sale online, but you should also ask your real estate agent to provide you with some recent sales statistics. He/she can pull recent figures that will help you in your search, and will help provide perspective about pricing on homes that you’re interested in.
  • Assemble the right team: Find an agent that is knowledgeable about your area, experienced and trustworthy. You need an agent that you can feel confident in, and you’re likely to find the best fit through word of mouth as opposed to finding someone online. Ask your friends, family, coworkers, neighbors, etc., for recommendations on an agent. Then, meet him or her and find out how long they’ve been working in your area, how many clients they have, if they have expertise with first time buyers, etc.

Get more real estate tips at the Equifax Finance blog as well as tips on retirement, insurance, taxes,

credit score, identity theft protection and more.

First-Time Home Buyers Want Smaller, Less Expensive Homes

first time home buyerResearch from the National Association of Home Builders (NAHB) shows that first-time home buyers are contributing to an increase in demand for smaller and less expensive new homes. In fact, 41 percent of the 8.4 millions households who bought a home from 2007 to 2009 were first time buyers.

“Builders are increasingly gearing their homes to the needs of first-time buyers, and we expect the trend to continue in the period ahead as the economy begins generating more jobs and more people in their 20s form households,” said Bob Jones, chairman of NAHB and a home builder from Bloomfield Hills, Mich. “New homes are a better match for the needs of the population in general,” Jones said. “Compared to what is typically available in the existing housing stock, they are more energy-efficient, easier to maintain and have designs better suited to today’s lifestyles.”

The market share of first-timers was up from 35 percent in both 2005 and 2007. Although some of the demand was fueled by the initial version of the home buyer tax credit in mid-2008, which was specifically targeted to those buying a home for the first time, the upward trend is expected to continue as children of baby boomers — members of a generation that is larger than their parents’ — move into their household formation years in the period ahead.

Although new housing is significantly more expensive than the existing housing stock, 13 percent of first-time buyers between 2007 and 2009 purchased new homes. By comparison, 17 percent of all the homes sold during that period were new.

Competing with foreclosures and large house price declines in the existing home market, new homes lost ground disproportionately during the housing downturn, falling from a 21 percent share of the homes sold in both 2005 and 2007.

The average market value of a new home purchased was more than $315,000, compared to more than $238,000 for existing homes.

First-time buyers for the two years of the study had an average age of 34, compared to 46 for those trading up.

The average income of first-timers was over $67,000, about 30 percent below the average household income of trade-up buyers of $97,000. About half of the first-time buyers earned less than $60,000.

The household size of both first-time and trade-up buyers has been declining, while single-person households have been on the rise.

First-timers bought homes with an average market value of about $184,000, compared to more than $297,000 for trade-up buyers.

First-time buyers bought homes averaging 1,874 square feet, significantly below the 2,549-square-foot home purchased on average by those trading up. Forty-six percent of first-timers bought homes smaller than 1,500 square feet.

The large majority of first-time buyers — 82 percent — purchased single-family detached homes.

Looking at survey findings on the reasons that buyers chose a particular home, the NAHB study notes that price was the top consideration for 38 percent of the first-time buyers, followed by the design and layout of the home, at 36 percent.

On average, first-time home buyers looked at 15 homes before making their purchase; 63 percent used their savings as the source of the downpayment; and 22 percent of them had no downpayment. That was down from a peak of 25 percent in 2007, reflecting a tightening of credit standards in the mortgage market.

The full report is available at www.nahb.org/homebuyerstudy.