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What first-time buyers should know right now

Worried about rising interest rates? You’re not alone. But if you are wading into the housing market, read this first.

It is an exciting but still strange time to be a first-time home buyer. Interest rates are rising, which is nerve-wracking, but is still relatively low, which is attractive. The market is competitive and benefits sellers in many areas. Of course, there are some general home purchases that should be made and not made that change a little over time (make sure you can afford the monthly mortgage payment, do an inspection, have your financing in place, carefully evaluate if you are actually going to buy, not rent. ..).

But if you want to buy a home now or nu-ish, what should you know about navigating today’s market?

To find out, we asked Steve Wydler, a broker (at Wydler Brothers) who works in a market called DMV – Washington, DC and nearby suburbs of Virginia and Maryland. It is a competitive sales market, and as such provides useful examples and guidance for navigating similar markets in other parts of the country. Here’s what we learned.

In this article:

Do not believe the hype

“A lot of people are hyper-focused on interest rates now, and there are a lot of ‘I missed the window, I should have bought three months ago,'” Wydler says. you look, we are still close to historically low levels. “

This means that if you have a nagging feeling you should buy right nowor if you are handicapped by financial FOMO, you should probably trim it down and make your decision calmly, once you have checked your finances and really figured out what type of home you want to buy, even if the price rises a little during the process.

“Buying something today at a speed that you think is high is OK,” says Wydler. “If it goes up, you will feel like a genius. If it goes down, you can refinance. In general, I do not think the interest rate should affect the decision beyond making sure you can afford the monthly payment.”

An agent can help

You always need a good agent when buying a home, but in a competitive market it is especially important: you may need to make big decisions quickly, so you need someone who can help you make good choices at a fast pace.

An agent who really knows your market is also well positioned to help you find a good opportunity when it arises. “Sometimes the worst thing that can happen is that the first property a buyer sees is actually the best, but they have to see another 10 to validate it,” says Wydler. “When they see them, the first one is gone.”

An agent who knows the market can help you avoid that situation by telling you when you have actually stumbled upon something good quickly. Equally important, he or she can also tell you when you just think the first thing you saw is the business of the century, but it’s not. A good agent can also show you real estate outside the market, which is useful now that many people – ordinary people as well as professionals – have access to the same listings online.

Think about your priorities

But before you start looking at real estate, there are some preparations to make. “I like to create a must-have and a nice-to-have list,” says Wydler. “Must-ha should be as short as possible and nice to have as long as possible. And it is encouraged that those lists change when we go out and look at real estate. ” Because so many lists are available online, it is important to go through these lists in detail, because a buyer is dealing with rigid search terms, not a person who can interpret nuances.

For example, let’s say you tell your agent that you want five bedrooms, but that you actually want to use one of those rooms as an office: “The search criteria are difficult,” says Wydler. “If you search for ‘at least five bedrooms’ you will not see properties with four bedrooms and an office,” so you should be as detailed as possible about your needs.

The same idea applies if you want a two-car garage to use one of these parking spaces as a workshop or for storage: Search only for “two-car garage” and properties with a one-car garage and another workshop space will not appear.

Make an offer they can not refuse

Perhaps the biggest difference between being a buyer in a buyer’s market versus a seller’s market is the type of offer you have to make. In a strong seller market (which is what large parts of the country are right now) “buyers do not decide the terms of the offer, it is the sellers”, says Wyland. “The seller may say ‘I want to close as soon as possible’ or they may say ‘I want to be here until the end of August'”, and a buyer will probably need to follow. “In most cases, buyers write their offers exactly tailored to what the sellers are asking for,” he says.

In addition to just offering the seller a huge pile of money, buyers can also make themselves more attractive by making sure their financing is solid. If the source of your financing is responsive (if the seller has questions) and can write a strong pre-approval, it helps to assure the seller that the deal will go smoothly.

Another thing that has that effect is the size of your down payment. “All else being equal, people would rather accept an offer with 50% down than 10% down,” says Wyland. “Lower loans, lower risk of valuation problems.” This may not suit you, but if it does, it’s worth keeping in mind.

Some things are always true

In this or any market, remember that home buying works best when it is a long-term purchase. If you can see yourself owning a property for at least five years, you should consider buying, says Wydler, but if you think you will have it for less than three, consider renting. This is partly due to the costs associated with home buying and home ownership – it takes time for them to pay for themselves. Markets also go up and down in the short term, but if you buy in an area where prices increase in the long term, you are more likely to see a profit if you can keep your property longer.

Buying a home should be one of the momentous events of your life. Another thing to consider regardless of the market is life insurance. It makes sense to help ensure that your family can continue to pay the mortgage if you or your partner is no longer around, and it will also remove at least one worry from a stressful process.

Our editorial policy

Haven Life is a customer-centric life insurance agency supported and wholly owned by the Massachusetts Mutual Life Insurance Company (MassMutual). We believe that it can be refreshingly easy to navigate decisions about life insurance, your personal finances and overall well-being.

Our editorial policy

Haven Life is a customer-centric life insurance agency supported and wholly owned by the Massachusetts Mutual Life Insurance Company (MassMutual). We believe that it can be refreshingly easy to navigate decisions about life insurance, your personal finances and overall well-being.

Our content is created for educational purposes only. Haven Life does not support the companies, products, services or strategies discussed here, but we hope they can make your life a little less difficult if they suit your situation.

Haven Life is not authorized to provide tax, legal or investment advice. This material is not intended to provide and should not be used for tax, legal or investment advice. Individuals are encouraged to seek advice from their own tax or legal adviser.

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