| financial preparation for first-time home buyers | ||
Five years ago, first-time home buyers got the chance to reap the benefits of real estate bliss. With a prosperous economy and low interest rates, homeownership reached a record high of 69 percent in 2004 according to the Census Bureau; however, the real estate market has plummeted in the last three years and foreclosure rates are at an all-time high. As a result, first time home buyers are forced to be more cautious in making what could be the most important financial decision of their lives. Following are several steps that first-time home buyers can take to make the process easier. Seek Help: It’s important for first-time home buyers to seek programs that will help them realize their dream. Fannie Mae recently teamed up with NBA Hall-of-Famer Dominique Wilkins to start the 21 Steps to Home Ownership program (21stepshome.com; 1-877-21STEPS ). The program provides vital workshops that educate individuals on how to become homeowners. The Neighborhood Assistance Corporation of America (naca.com) also has a program that teaches its members how to manage their homes financially. Avoid Predatory Lenders: Because real estate has become one of the most vicious industries in the nation, home buyers must avoid predatory lending at all costs. Some of the warning signs of predatory lending include excessive fees, abusive prepayment penalties and mandatory arbitration. Manage Your Credit: A good credit score gives first-time home buyers the leverage when negotiating their loans. Under the Fair Credit Reporting Act (FCRA), consumers are entitled to a free copy of their credit report once a year from each credit bureau (experian.com, equifax.com and transunion.com). Make Sure Your Cash Flow is Right: New loan programs allow first-time buyers to purchase homes with a six percent down payment or less; however, proper budgeting and disciplined spending habits will help when those mortgage payments are due each month. Know What You Want: First-time home buyers should make sure the community that they choose to live in will fit their lifestyle. It’s also important to research proposed developments that could change the landscape of their new neighborhoods and affect the property value. Buying a home can be a rewarding experience, but the amount of home buyer’s education that you obtain will determine if your new abode will be the perfect dream or a nightmare. – amir shaw |
