What Are The Top Home Buyer Concerns Purchasing First Home

This guide covers home buyer concerns buying their first-home. A home purchase is most people’s single largest investment in their life. The housing market is hot with no signs of a housing correction despite high mortgage rates. Mortgage rates have been the highest in the past three years but started to decrease in the past couple of weeks. Housing prices have been increasing year after year since 2014 with no signs of a slow down. Just in 2020, home prices have increased by over 20% nationally.

Most homes will be under contract in less than 30 days in the market. The average home will sell over the list price. It is definitely a seller’s market.

HUD and the Federal Housing Finance Agency (FHFA) have been increasing FHA and Conforming Loan Limits for the past three years due to rising home prices. Many renters who have been waiting for home prices to get a correction are now ready to pull the trigger on buying a home. With interest rates dropping, many renters are looking to get qualified for a home loan. However, first-time homebuyers do have many home buyer concerns.

Top Home Buyer Concerns By First-Time Buyers

One of the top home buyer concerns is rising home prices. A home that was worth $200,000 a few years ago may be worth $250,000. Lack of inventory is driving home prices up throughout the continental U.S. In 2021 and 2022 homebuyers were buying homes at higher than the list price. The practice of buyers buying homes at higher than list price has stopped and so has the multiple offers.  This was due to the high demand for homes.

Home prices are reaching an all-time high since the 2008 Real Estate Collapse. Homebuilders are building more and more condos and townhomes in landlocked cities.

There were more buyers than an inventory of homes. It is not uncommon for most homes to have multiple bids. Competition among homebuyers is another major homebuyer concern. With mortgage rates being the lowest in three years, there are more first-time homebuyers shopping for homes. Bidding wars and lack of housing inventory is the top home buyer concerns.

Am I Making The Right Investment Home Buyer Concerns 

Potential homebuyers often have several concerns and considerations when purchasing their first home. In this section, we will cover some of the top concerns that first-time homebuyers typically have: One of the primary concerns for first-time homebuyers is whether they can afford to buy a home.

It is a concern to understand closing costs and how much they will add to the overall expense. Buyers want to budget for these expenses.  

They worry about their ability to secure a mortgage loan, make a down payment, and cover ongoing homeownership costs. Buyers are concerned about their credit score, how it will affect their ability to qualify for a mortgage, and the interest rate they’ll receive. The biggest factor in pricing mortgage rates is the credit scores.

Home Buyer Concerns on The Down Payment and Closing Costs

Saving for a down payment is a significant concern. Buyers often wonder how much they need to put down and where they’ll get the funds. First-time buyers want to understand the different mortgage loan options available to them and which is the best fit for their financial situation.

The state of the real estate market, including home prices and inventory levels, can be a major concern. Buyers want to know if it’s a buyer’s or seller’s market.

A home is most people’s largest investment. Homes have skyrocketed in value and what goes up can come back down just as fast. Thinking about the home’s potential resale value is a concern, especially if they plan to move.  Beyond the mortgage, buyers must consider property taxes, insurance, maintenance, and utility costs. Many first-time buyers worry about fully understanding the home-buying process and seeking education and guidance.

Home Buyer Concerns on Property Location and Condition

Choosing the right location is crucial. Buyers consider proximity to work, schools, public transportation, and safety. Worries about the property’s condition and potential maintenance costs are common. Buyers may wonder if they should opt for a new home or a fixer-upper.  Researching the neighborhood and community is vital. Buyers want to know about the quality of schools, amenities, distance to and from work, and the overall vibe of the area.

Homebuyers often consider their long-term plans. They think about how long they plan to stay in the home and whether it will meet their needs as their life circumstances change.

The results of a home inspection can be concerning. Buyers want to ensure they’re not purchasing a home with significant hidden issues. Buyers may be concerned about the potential for the home’s value to appreciate over time, as this can affect their investment.  To address these concerns, first-time homebuyers must thoroughly research, work with experienced real estate professionals, and create a detailed budget and plan before purchasing.

Home Buyer Concerns on Down Payment and Closing Costs

The second top home buyer concerns is many buyers are worried about the down payment and closing costs. Most homebuyers do not have to be worried about closing costs. Closing costs can be paid with a seller’s concession or lender credit. The down payment required depends on the loan program. However, lenders allow the down payment to be gifted. Borrowers can borrow against their 401k Retirement Plans for the down payment or closing costs on a home purchase without affecting the debt to income ratio calculations. Gustan Cho Associates has 220 wholesale lending partners. Some wholesale lenders have down-payment assistance programs which is forgiveable.

Down Payment Requirements on Home Loans

Here are the down payment requirements on home purchase:HUD, the parent of FHA, requires a 3.5% down payment on FHA loans.  Fannie Mae and Freddie Mac require 3% to 5% down payment on conventional loans. VA and USDA loans do not require any down payment on a home purchase. Non-QM Loans require a 10% to 20% down payment payment. Gustan Cho Associates offers 5% to 20% down payment Non-QM Jumbo Mortgages. Gustan Cho Associates offers down payment assistance programs to first-time home buyers.