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Is now the time for first-time homebuyers?

April 22, 2008 12:00:00 AM PDT
With foreclosures flooding the market and home prices dropping like lead, this may seem like a good time for first-time buyers to get into a place of their own. But is it the time to buy? Monday, one Orange County realtor said he thought the housing slump was hitting bottom because more homes are now in escrow. But even if sales are better, what about prices? No one knows for sure, but one thing is certain, buyers today are in the driver's seat.

It has been a very long time coming for Emily and Robert Buban of Mission Viejo. For many years Emily has been renting but now she and her new husband have their first home together, and what a feeling that is.

"It's really exciting," said Emily Duban. "I haven't owned a home before. I've been renting for about 25 years, so I'm really thrilled to be able to paint a wall a color other than white."

"For me it's going to be a media room upstairs where we can put some flat screens, some surround-sound, real big heavy sofas, to really just sit and relax," said Robert Duban.

Although the Dubans spent two years looking, did these first-timers make the right decision buying in today's sluggish market? And for that matter, is this a good time for anyone to buy? Well, it could be. Home prices have been beaten down in a big way, especially in the Southland, so that is making houses more affordable.

In fact, according to DataQuick real estate information, last year in Orange County there were only 343 detached homes for sale below $500,000. Today there are more than 2,800. And you'll find similar changes in L.A.

Plus, realtor Michael Caruso says the new FHA mortgage limit of $729,750 is another reason for an answer of yes.

"It gives the consumer a 30-year fixed rate backed by the government. No surprises in the loan," said Caruso. "It's a little more paperwork-intensive, but shouldn't it be if you're going to borrow nearly three-quarters of a million dollars?"

If you're about to buy your first home:

  • Know how much you can afford by getting pre-qualified and pre-approved.
  • Choose a neighborhood looking at crime rates, taxes, and schools.
  • Make sure the home appraises for at least what you've offered.
  • Hire a thorough home inspector.
  • Find a good realtor and a good lender.
  • And read and understand everything you sign.
"If you're looking at real estate not as an investment, but as a home, at part of your financial plan, but not your entire financial plan, there's always the right reasons to buy a home," said Caruso.

The Dubans said they're glad they're making the move.

"When you find something that you like and it works for you, if you can afford it and it makes sense, you should do it," said Duban.

Remember, no one has a crystal ball and home prices could continue to drop. Some experts believe it will be some time next year, at the earliest, before we get back to normal.

Yahoo Finance: How to Buy Your First Home

 

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