PHOENIX — The Valley is one of the hottest real estate markets in the country with record home prices and no signs of it slowing down. Not only is it difficult to buy a home with all the bidding wars, but if you’re a first time home buyer, it can almost seem impossible because of the fierce competition.
“Unfortunately, it's very hard for a first time home buyer to break in because they're in the price point where there is the most buyers, they're usually $300,000 or less,” said Danielle Paluscio, a realtor with AZ Premier Group.
Her clients, Daniel and Dianne Lee, just bought their first home. The newlyweds admitted the process was scary at first. Their biggest struggle was budget.
Then they were trying to find a banker and deal with loans, among many other things they’ve never encountered. The Lee’s say it was all so complicated.
“Yeah, it was very stressful, like learning a new language,” Daniel said.
So here are four new strategies for first time home buyers before the house hunt even begins:
- Explore all loan options. This includes loans that are specifically designed for first time home buyers. If you qualify, some of these loans only require a down payment as low as 3%.
- Decide a home buying budget. Most experts recommend your monthly house payment should not be more than 30% of your monthly income.
- Don’t make any major purchases using credit right before or during your house hunt. For example, taking on a new car payment could affect your credit score and therefore, how much money you get approved for.
- Make sure you have enough money for closing costs. There will be loan fees, inspections and processing costs that are usually not covered by the loan. So you’ll have to pay out of pocket.
Paluscio said another tip first time home buyers can do to win the bidding war is write a personal letter to the seller. That’s what the Lee’s did to buy their condo after looking at about 30 homes. They paid $5,000 over asking price.
“Overall, it’s still a great purchase,” said Lee.
For more information about home buying and selling in Arizona, visit the links below. Stay tuned for more stories about the current real estate market in Arizona.