First-Time Home Buyers
There’s a lot to learn when you buy your first home, so I’ve compiled a list of Frequently Asked Questions and Answers. Please take a look to help get started on your journey to ownership.
Frequently Asked Questions
- How much can I afford? People often get the idea that they want to buy a house and start to look before they even have any idea about what they can afford or should pay. In recent years, lenders were very liberal, and now it’s come to light that they were too liberal. Everyone’s situation is different. Generally financial advisors say that you should put a maximum of 30 to 35% of your gross income toward your housing costs. But everyone’s financial obligations, consumption habits and debts differ, and for some people the ratio should be less. (Be sure to factor maintenance costs – see below “the costs of home ownership” – into your new monthly budget.) It’s best to talk to a mortgage person before you start and get approved so you’re looking at homes in your price range. Visit Mortgages and Other Essentials for more information.
- What will the monthly payments be with taxes? To calculate the monthly price of a home, use our mortgage calculator.
- Who pays the real estate agent’s commission? As a buyer’s agent, I represent you and your best interests, but (and here’s the good part) the commission comes out of the seller’s proceeds.
- What is the process of buying a house? What do I need to do? Email me and I’ll send you a description of the process involved in buying a property–from the offer to the closing. It includes all of the things you must be prepared to do. (Highly recommended!)
- What are the tax benefits of owning as opposed to renting? Though the 2009 stimulus tax credit for home buyers has come to an end (and the deadline for those who have already entered a contract by April 30, 2010, has been extended), the interest on your mortgage and property taxes are deductible from your adjusted gross income, so you will pay less in federal taxes, especially during the early years of an amortizing loan. On NJ state income taxes, your property taxes are 100% deductible up to $10,000 Often people are surprised to discover that after calculating the tax benefit, they are not paying that much more to own a home than they did for rent. And yet the quality of life is dramatically better. And, as you’ve heard countless places, you are living in your investment, and homes historically have been shown to appreciate over the long term. (Please check with your financial professional for specifics about your situation.)
- What are the costs of home ownership? Many first time buyers need to understand the additional costs of home ownership. It’s best to budget something every month to put aside for routine maintenance that inevitably arises–whether it’s replacing a broken dishwasher, fixing a cracked sidewalk, or having someone mow the lawn.
- I like the house and the location, and the price, but it is missing a … Sometimes you shouldn’t pass up a great house because everything is not done exactly the way you want it. I’ve found that first-time homebuyers often lack the experience to know how to make even modest improvements that can dramatically change the look or function of a house. You should know that you can adapt your house to suit your needs. Based on my design and architecture education and experience, I’m happy to help you think through the possibilities of your space.