Buying a First Home
Buying a house for the first time is one of the most exciting decisions you’ll ever make. The search for the perfect home is filled with dreams of the future and visions of how much better life will be once you are in your own home. Purchasing a first home is also one of the most significant financial events in your life, so don’t let the fun of the search prevent you from making a wise decision about how the home will be financed.
Times have changed, and much of the advice from just five or so years ago may no longer hold true for home buyers today. Many first time home buyers have worries and questions about current financing options. You may know people who now owe more on their homes than the current market value of that home. For generations, a home was considered your biggest investment, but this is no longer the case for those who bought at the height of the real estate bubble. Being aware of these problems can be frightening, but people buying now are much less likely to see their homes devalue, as real estate prices have seen a major correction already.
One of your first considerations is weighing the relative merits of buying vs. renting. This depends on your personal goals and financial situation. It may also depend on your area’s housing market and employment outlook. If your housing market has already seen a correction and home values are starting to recover, this may be the perfect time to buy. If, on the other hand, your region is continuing to see a decrease in home values, you may want to wait until there are signs of recovery. Some areas have seen a significant increase in rents due to the large number of people delaying home purchases. These are the factors that need to be considered along with your own personal situation. Don’t be afraid to sit down with local experts, asking them probing questions that can help guide your decision. 
Although you may still see references to the first time home buyers tax credit, be aware that this refundable federal income tax credit has expired. There are other resources available, but you may have to do some research to be sure which programs are legitimate. The U.S. Department of Housing and Urban Development can be a great help guiding you to state and local home buying programs. Also be aware that there are many helpful home buying programs available outside of government entities.
Be knowledgeable about how to avoid the abusive practices of mortgage lending market. One of the factors that led to the financial crisis was predatory lending schemes. These offered zero money down payment options with variable interest rates that looked very appealing to buyers who couldn’t afford a down payment. Many of the lenders did not factor in the client’s complete financial situation and ability to repay the loan. Thousands of these buyers quickly found themselves with mortgages they simply could no longer pay, as interest rates on their loans continued to rise year after year. This led to the continuing problem with foreclosures and the resulting devaluation of home prices.
Rather than be discouraged by all the changes in the housing market and the loan industry, remember that arming yourself with knowledge will help you avoid any pitfalls when buying your first home.
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