2008 First Time Home Buyer Outlook

While you hear all of the media and the hype about the real estate market, there has never been a better time to purchase your first home.  I would like to disspell some myth from fact and ease your mind about making a purchase. 

Myth:  Interest Rates are High-

Fact:  Interest Rates were significantly higher just 7 years ago during the early Bush years.  It wasn't until 911 that the interest rates hit a 40 year low.  The rates were so low, it was ridiculous and now that the rates have normalized, people forgot what normal is.

Myth:  Buying a Home is Not a Safe Investment

Fact:  Is there a single home on this planet that you wouldn't buy at it's 1970 value?  Homes appreciate(Go up in value over time.)  The real concern is how quickly they appreciate.  Over any period of time in history, all real estate values have increased.  The question is, how long of a period?  In some areas you may enjoy strong appreciation in as little as six months to a year, in other areas it may take several years to notice any significant appreciation.  Today's rule of thumb, plan on living in a house for at least 5-7 years to make some real money.  This is to compensate for any low spikes in value as well as paying a real estate commission to sell.

Myth:  Home Ownership is Expensive

Fact:  Lack of ownership is expensive!  In our society, saving money is hard and not accomplished by most Americans.  For most of us, our homes equity is all we have to retire on.  The longer you wait to purchase a home, the less you will have to retire on.  This is a basic function of the time value of money.  Another important fact is that the government give you a write off(tax benefit) for owning a home.  Come tax season, you will receive a larger tax return for owning a home. 

Myth:  I need to pay off my credit cards before I buy my first home.

Fact: Until you have the financial benefits of home ownership, you may never get out from under your credit cards.  The longer you wait to buy a home, the more it will cost.  Unless you know that you are going to have a significant pay increase or have a windfall, your best option is to buy a home asap.  It doesn't have to be the home you retire in...just become a home owner! 

Myth:  I need to save large down payment to buy a home.

Fact:  While 100% financing is not as easy to achieve as it was just a year ago, it is still available.  There are still FHA/VA loans as well as traditional banks that offer 100% financing.  You need to consult with a mortgage broker as soon as possible to assess your situation and help you locate the best financing options. 

Myth:  Using a Realtor won't save me money.

Fact:  Using a Realtor who does nothing isn't woth it, using a well qualified, experienced Realtor who cares is worth it.  When purchasing a home- New or Resale, your agent is paid by the seller (or builder whichever the case may be.)  I have negotiated over 175 real estate transactions.  If you don't like negotiating with a car dealer for a small purchase, let an expert negotiate on your behalf on what may be the largest purchase of your life.