First Time Homebuyers - Are We Asking the BEST Questions?

 was asked this week by a national publication to help answer the question “What are the best loan programs for a first time homebuyer?”  I gave them my opinion, but came to the conclusion that this really isn’t the best question that needs to be asked. Most first time homebuyers get so wrapped up in trying to maximize their purchase that they lose sight of how that affects their day to day and financial future. The 2 best questions to ask are these- How is this purchase going to affect my budget? And what is my exit strategy?

Most people in general don’t seem to have a budget. Money simply comes and goes with the hope that there is more coming in than going out. First time homebuyers therefore, are more interested in where the home is located, how big it is, what the amenities are and its curb appeal. These are all very important things, but how the payment will fit their budget is the thing that is going to be most life impacting.

I’ve written on this topic before, but as a brief recap, I personally believe it is critical to establish a monthly budget where ALL monthly expenses total an amount that is no more than 80% of the monthly net figure. This allows for a comfortable cushion that permits any individual to give or save up to 20% of their bring home pay every single month. What kind of value could we as real estate and finance professionals add to our clients if we had this in mind throughout our work? Can we accept the challenge of finding the house that meets their wants within the proper boundaries of what’s best for their budget? That is real care and concern for the success of the people we serve.

The next step is to have an exit strategy for any purchase. Both the home specifics as well as the financing are critical to this part of the equation. It is just as important to consider the home’s desirability by the general population as it is determining how well it fits the immediate needs of the current buyer. For a first time homebuyer, the likelihood of them staying in the home until retirement is unfathomable. Most don’t stay in the home more than 5-7 years. So considering the ability to sell in the future needs to be of utmost consideration in the purchase now.

I’m encouraged to be working with individuals as great as you all reading this blog. Together we have the opportunity to help our clients succeed financially. And as you know, the right home purchase, especially for a first time buyer, is a huge part of that equation.