John M. Lee – Richmond Review/Sunset Beacon

buy your first home

What should you consider before buying your first home? This is a very important question. For most people, this is the biggest financial investment of their lives. Buying a home is a very exciting thing, and owning a home is still considered by many to be the realization of the American dream.

With the median price of a single-family home selling for approximately $1.45 million in San Francisco, this is a significant investment that requires careful preparation and consideration of your options before taking the plunge into homeownership.

Can you afford to buy a house? Prices are high, but cheaper than they were a few years ago. The interest rate will be higher, but if the interest rate goes down, you can refinance with lower monthly payments. What's the worst that can happen if you take out a 30-year mortgage? You can pay off your home in full and own your home free and clear in 30 years. What's the alternative? You could rent for the next 30 years and still not own your home and lose the equity you would have had.

With the stock market at new all-time highs, inflation under control, publicly traded inventories falling, and the Federal Reserve signaling a readiness to cut interest rates, there are signs of a bottom in real estate, which could lead to market pressure. may be a good entry point.

There are many costs involved when purchasing a home, including the down payment, loan fees, title and escrow fees, moving costs, and furnishing the home. Additionally, there are ongoing expenses such as a mortgage, property taxes, insurance, and maintenance. Make sure you have enough money and long-term financial stability to pay these costs before making a commitment.

The method of financing is very important. I've always recommended a 30-year fixed-rate loan, but as interest rates tend to fall, I recommend getting a variable-rate or 5-7-year fixed rate loan with a lower initial interest rate and refinancing later. may be wise. .

Owning a home is only a wise choice if you plan to keep it for a while. I think this means it will take at least 5 years to weather the ups and downs cycle of real estate, if necessary. Buying and selling a home costs a lot of money, so it's almost impossible to make a profit if you sell it within a short period of time. It's also unlikely that you'll accumulate any equity in your home, since most of your mortgage payments initially go toward interest on the loan rather than principal.

There's nothing wrong with renting if you want flexibility. Wait to buy a home until you're where you want to put down roots. Once you reach that point, homeownership makes a lot of sense from an economic standpoint. Owning a home not only appreciates in value over the years, but it also has tax benefits. Subject to certain limitations, mortgage interest and property taxes can be deducted as federal and state income taxes. When sold, he can earn a tax-free profit of up to $500,000 if married and $250,000 if single. Homeowners can keep significantly more money in their pockets in the long run than renters.

Another decision to make when you're ready to buy a home is whether to take your mortgage into account and buy a single-family home, a condominium, or an apartment complex. Do you want a fully repaired home, or do you prefer to buy a fixer-upper and put your sweat capital into it to increase the value? What amenities and features are important to you?

Do you need a home close to work to minimize commute time? Does it need to be near public transportation? What about your child's school district? Is community important to you? Do you want to be close to shops, restaurants, and other amenities? How much outdoor space do you need?

As you can see, deciding to buy is only the first step. Implementing that decision will require more work and guidance. When you're ready to buy, we recommend working with a qualified real estate agent, lender, accountant, and, if necessary, an attorney to develop an implementation plan.

With the right team in place, finding the perfect home is exciting, rewarding, and provides long-term financial security for you and your family.

John M. Lee is a Compass broker specializing in the Richmond and Sunset areas. If you have any real estate questions, please call 415-465-0505 or email johnlee@isellsf.com.