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How First-Time Buyers Are Finding a Home in Today’s Market

Today’s real estate market has gotten super hot, with many homes in certain markets selling in two weeks or less.

When looking online for homes, first-time buyers should search for the most recent listings, says National Association of Realtors media spokesman Walter Mooney. He says sites like the national realtors website updates in real time.

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Many sites are pretty good when it comes to providing data and consumer information. The problem comes in analyzing and understanding the data, according to housing and real estate experts.

Absorbing the info

One of the biggest mistakes first-time home buyers make is not knowing how to read the raw data. That’s where the expertise of an experienced real estate agent comes into play.

Once a home shopper has looked through online listings to learn about what’s available, the next step is to contact a professional agent in person. That means talking face-to-face with the agent.

This enables you to get advice from someone who’s suitably knowledgeable about the local market, and can take online searches to the street. Of course you’ll want to see the house before buying, regardless of how good it looks on the Internet.

Getting over hurdles

Another potential misstep comes from not understanding how to do online price searches for homes. You might want to find a half-million dollar house, so you input $500,000. But might qualify for houses valued at 10 percent more.

First-time home buyers face lots of hurdles in today’s challenging real estate industry. Families, couples, and singles are required to put down a minimum of 5 percent.

But today’s market is so highly contested that the 5 percent figure won’t cut it in many cases. First-time buyers in New York City have been expected to make down payments of 20 percent.

You also have to obtain mortgage insurance if you’re a first-time home buyer. If you put down less than 20 percent of the purchase price, you’ll have to pay mortgage insurance until you’ve paid off 20 percent of the home.

Your credit scores may also be a factor that sets your mortgage insurance costs.

First-time buyers beware

First-time buyers should also be aware of closing costs. These include fees for surveys, appraisers, and commissions. They also include certifications and inspection services, titles, and taxes, even government record changes, and in many cases, transfer fees.

Other considerations in a large city such as New York may include co-op and maintenance fees.

Closing costs can add up to a lot, much to the chagrin of first-time home buyers. Many times they amount to between 3 and 6 percent of the total home cost. In other word, if you’re buying a $300,000 home, expect to pay $6,000 to $7,500 in closing costs.

Smart first-time buyers should hold onto a reserve for unexpected expenses. Experts recommend socking away the equivalent of six months of mortgage payments just in case something goes awry.

You have sources of help. FHA loans may be available with a 3.5 percent down payment and 4.25 percent interest rates. Mortgage insurance payments will be higher, though. VA and USDA loans also are available for veterans.