Is Jeff Bezos to Blame For Higher Home Prices? Tips For Affording Your First Home
Arrived Homes, a new investment company backed by Amazon founder and billionaire Jeff Bezos that allows people to purchase shares in rental properties, has come under scrutiny. Critics argue that it’s potentially inflating property prices and rents, making affordable housing out of reach for many.
Read More: 3 Most Expensive Hawaiian Islands To Live On and the 3 Cheapest
Learn Next: One Smart Way To Grow Your Retirement Savings in 2024
These investment-driven price increases, high mortgage interest rates and low home inventory make it expensive to buy a house for many. However, there is still hope for new homebuyers.
We checked with real estate experts on how first-time homebuyers can afford a home despite these challenges.
Start Saving Early
According to Brandi Simon, a real estate expert and founder of TX Home Buying Pros, you shouldn’t wait for a windfall to buy a home.
“Begin saving for your down payment as soon as possible. Set up a dedicated savings account and automate your contributions to ensure consistent progress towards your goal,” said Simon.
Trending Now: Barbara Corcoran Says, ‘Forget About Florida,’ Move Here for Cheap Homes
Don’t forget to factor in closing costs, too, according to Colten Claus, an associate broker with 8z Real Estate. These can range from 2% to 5% of the home’s purchase price. “Having substantial savings can make the buying process smoother and less stressful,” he said.
Additionally, Claus said a larger down payment reduces the loan amount and leads to more favorable mortgage terms.
Get Preapproved
Preapproval is an important step before taking out a mortgage.
“Mortgage preapproval gives buyers a clear idea of what they can afford and shows sellers that they are serious and financially capable,” said Claus.
This step involves thoroughly checking your financial background and credit rating, giving buyers a competitive edge in a tight market.
Explore Down Payment Assistance Programs
First-time homebuyers should also explore the variety of down payment assistance programs available.
“These programs can provide grants or low-interest loans to help cover your down payment and closing costs,” said Simon.
Enhance Credit Score
Improving credit scores is another way to get better mortgage rates.
“Buyers should check their credit reports, dispute any inaccuracies, pay down high balances, and avoid opening new credit lines before applying for a mortgage,” said Claus.
Consistent, timely payments and reducing overall debt significantly impact your credit score positively.
Shop Around for the Best Mortgage Rates
While it may be exciting to get that preapproval, don’t settle for the first mortgage offer you receive.
“Take the time to compare rates from multiple lenders to find the best deal. Even a small difference in interest rates can result in significant savings over the life of your loan,” said Simon.
Consider Alternative Loan Options
All loans are not created equal, either.
Explore alternative loan options such as FHA loans or VA loans, which often have lower down payment requirements and more flexible eligibility criteria for first-time homebuyers,” said Simon.
Claus added several other loan types, including an all-in-one loan, which combines a home loan and a checking account.
“Borrowers can deposit their income into the account and use it to pay down the mortgage balance more quickly. Interest is calculated on the lower balance, potentially saving on interest payments over the life of the loan and possibly paying off the mortgage earlier,” said Claus.
Additionally, many states and local governments offer programs specifically for first-time homebuyers, including down payment assistance, subsidized interest rates, and tax credits.
Expand Your Search Area
Finding the right home might require stretching into other areas.
“In a competitive market with low inventory, consider expanding your search area to include neighborhoods or suburbs that may be more affordable,” Simon said.
Being open to different locations can increase your chances of finding a home within your budget.
Be Flexible with Your Criteria
While it’s important to prioritize your needs and get a home you’re happy with, Simon also urged being willing to compromise on some of your wants.
“Being flexible with your criteria can open up more options and make it easier to find a home that fits your budget,” said Simon.
Negotiate with Sellers
If a price seems out of reach, or you’re wondering if there’s wiggle room, Simon advised you to work with your real estate agent to negotiate with sellers on price, closing costs, or other concessions.
“In a seller’s market, negotiation is key to getting the best deal possible,” said Simon.
“An experienced real estate agent can be invaluable in negotiating deals, especially in a tough market where every advantage counts,” said Claus.
Factor in Additional Costs
Also remember to budget for additional costs such as property taxes, homeowners’ insurance and maintenance expenses.
“Having a comprehensive understanding of your total housing costs will help you avoid unexpected financial burdens,” said Simon.
Don’t Rush the Process But Be Ready to Act
Simon advises taking your time and avoiding being pressured into a purchase.
“Buying a home is a significant financial decision, and it’s important to thoroughly research your options and make an informed choice,” said Simon.
At the same time, in a seller’s market, desirable properties sell fast.
“Buyers should be prepared to make decisions swiftly while still ensuring the property meets their needs and stays within their budget. Quick action, coupled with a solid offer, can make the difference in securing a home,” said Claus.
Understand Market Trends
While you don’t have to get your Realtor’s license to get a great deal on a home.
“Keeping informed about local market trends and economic factors can help buyers time their purchase and make informed decisions. Understanding whether it’s a buyer’s or seller’s market, and how things like interest rates and inventory are moving, can guide strategy,” said Claus.
Most importantly, be prepared to exhibit patience and persistence. Buying a home that meets your financial needs in a tough market can take time.
More From GOBankingRates
Dave Ramsey: Why You Shouldn't Buy a New Car/Take Out an Auto Loan This Year
5 Reasons You Should Consider an Annuity For Your Retirement Savings
This article originally appeared on GOBankingRates.com: Is Jeff Bezos to Blame For Higher Home Prices? Tips For Affording Your First Home
