(InvestigateTV) — For many first-time buyers, the biggest question is not just which home to buy, but what they can realistically afford. Higher prices and interest rates have made the process more challenging.
John Kiernan, managing editor at WalletHub, said the pressure often catches buyers off guard.
“It can be extremely stressful,” Kiernan said. “For most people, it’s the biggest purchase they’ve ever made, and they really don’t have a whole lot of knowledge about how to do it.”
WalletHub recently compared 300 cities on 22 factors, including affordability, market conditions and quality of life. Kiernan said first-time buyers made up just 21% of the market last year, well below the historical average of 40%.
Kiernan’s first piece of advice is to prepare financially before beginning the search for a home.
“One of the things you should do is start your preparation before you start house hunting,” Kiernan said. “You really want to — that’s kind of putting the cart before the horse. You want to start a relationship with several banks, kind of go through the pre-approval process with multiple banks and be able to get a good offer. That way you can figure out really how much you can afford.”
Kiernan said first-time buyers should also research programs that can help with a down payment.
“A lot of times people assume you always hear that you need 20% for a down payment. That’s not necessarily the case for a first-time homebuyer,” Kiernan said. “A lot of these programs you might be able to not have any down payment or a 3.5% down payment, something like that. So you don’t necessarily need as much cash up front as you might expect, but you should really pay attention to getting your financial house in order before you figure out which house you want to order.”
Kiernan said first-time buyers should not waive a home inspection before making an offer. He also recommends budgeting for more than just the monthly mortgage payment when planning for homeownership costs.
Kiernan said first-time buyers should also keep their expectations realistic. A first home may not be a buyer’s dream home, but it can help them get started in the housing market.
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