Can you afford to buy a new home as a first-time home buyer?
As a potential First-Time Home Buyer, the idea of saving for your first home can seem like trying to bicycle of a mountain with a 60% grade . . . Impossible!
In fact, a recent poll by the National Association of Home Builders emphasized this very fact: "non-owners identified saving enough money for a down payment and closing costs as the number one barrier keeping them from homeownership, more than job uncertainty or concerns that the value of their home may drop below the purchase price."
Yet exceedingly stringent mortgage lending requirements could make that barrier even tougher for the typical American family to overcome in the future. For example, according to estimates by both NAHB and the Center for Responsible Lending, it would take more than 12 years for a typical family to save enough money for a 20 percent downpayment on a median-priced single-family home.
These are frightening thoughts for the First-Time Home Buyer and the New Home Builder but before we panic, I encourage you to take three steps towards reaching your home-ownership goal:
3 Steps Toward Reaching your Home Ownership Goal
- Educate yourself on Handling Your Finances. Start Saving Now. Say no to stopping by the corner store to pick up that Hershey (Pennsylvania) chocolate bar or the bag a chips for the late night snack. Financial Expert Dave Ramsey continually encourages his listeners to "live today like no one else so you can live tomorrow like no one else." Yes, this requires sacrificing some things but you'll be much farther ahead.
- Educate yourself about Mortgages. This might require sitting down with a local Mortgage Broker or other Mortgage Professional and determining what you can actually afford.
- Educate yourself about the Value of Buying a New Home and how to select a New Home Builder. Once again, I cannot stress enough, do your research. You'll also find out how much money you're needing to save.
Saving for your First Home requires goal setting and discipline. Don't be discouraged by the numbers, take it one day and one step at a time.