Buying a home today is supposed to be easier than ever for first-time home buyers. Sellers are desperate, and are willing to compromise on everything from sales price to repairs to closing dates. At the same time, housing inventories are high, meaning that buyers have plenty of homes from which to choose.
But Greg McCoy, a real estate agent with RE/MAX Unlimited in Peoria, Ill., says that first-time home buyers still face plenty of challenges. It’s why he’s written his own book, The House Hunt — A Guide to Buying Your First House. The book spells out several challenges that first-time buyers face when purchasing a residence.
“Buying a house is ever more complex,” McCoy told me. “Every year it gets more complex. That’s because real estate is a very regulated business. It’s like banking. There are many regulations for people to follow.”
What are some of the mistakes that first-time buyers often make? McCoy points to property taxes. Often, buyers who make offers on $200,000 homes see that the owners of these residences are paying low taxes. This, of course, makes the buyers happy. What they don’t realize, though, is that these taxes are based on the home’s assessed value. That $200,000 home may currently be assessed at $100,000. When the buyers make their purchase, though, the county assessor might re-asses the residence. If the assessor ups the assessed value to $200,000, the buyers will get a much larger tax bill than they expected to receive.
First-time buyers today also have to worry about qualifying for a home loan. Mortgage lenders have tightened their lending regulations since the start of the Great Recession. Today, McCoy says, borrowers need a credit score of at least 600 to qualify for a good conventional mortgage loan.
“During the go-go housing days, people could qualify for a mortgage loan as long as they were walking and breathing,” McCoy said. “We had people qualifying for loans that had credit scores in the 400s. These people never should have been able to get mortgage loans.”
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