As you probably know, home buying is a serious decision that should not be taken lightly. Buyers are often hesitant to jump into such a large purchase – and such an unfamiliar transactional territory.

However, as outlined in our articles Tax Benefits of Homeownership and Renting vs. Buying, owning a home is a smart financial decision for most. At Class Realty Group, we regularly talk to our clients about the home buying landscape and any concerns they might have. Below are a few of the most discussed issues. We believe it is important to identify home buying challenges and propose solutions so all clients may have the opportunity to comfortably enjoy the benefits of homeownership.

Home Prices

It is true that generally speaking home prices are higher across the board. This is largely due to low inventory, sidelined millennials, and seniors remaining in homes longer. As the housing market continues to improve, there is likely still more room for home prices to grow. The point here is that you never know what the market may do in the immediate future, and to be honest – you really shouldn’t care too much.

In situations where you need to sell in 3-5 years, your strategy may change. However, even if you end up having to move in the short term, you always have the option to rent your home while you wait for a better time to sell. In most situations, long-term home ownership will garner appreciation, force you to set aside money towards ownership/investment, relieve payments to landlords for no return, and enable you to reap the generous tax benefits of homeownership.

Interest Rates

It is true that interest rates have been at historic lows for a surprisingly long period of time. This means, of course, interests rates are set to rise. When or how quickly this may happen is uncertain, but we do know low interest rates will not last forever. Even though interest rates are likely on the rise, they are far from levels where buyers should be worried about borrowing money.

Instead, now is the perfect time to borrow money at an extremely low interest rate. As long as you feel comfortable with the mortgage payment, it’s a great time to lock in a 30 year fixed mortgage so you are protected as rates climb in the future.

Mortgages

After the economic crisis, many regulatory laws passed forcing lenders to take a much closer look at mortgage applications. There are stricter requirements and more hoops to jump through. Many of these laws are in place to protect you – the consumer. Do not be intimidated – qualifying for a loan is much easier than you may think. There are a variety of loan options that may work for your specific situation.

If for some reason you are unable to qualify for a loan at this time, there are ways to restore credit, save for a down payment or otherwise work towards meeting loan qualification requirements. It is best to chat with a broker or loan officer to determine what program is best for you.

Checking Boxes

Often time buyers believe they cannot find the perfect home within their price range. We work closely with our clients to develop a list of what is most important. We then tailor our search to homes and areas fitting their wants and needs. With a clear list of non-negotiable items in hand, we are more efficient and productive in our search – striving to check as many boxes as possible.

Competition

Given the market’s low inventory, sellers typically have the upper hand. This means there is significant competition among buyers. Battling for properties with multiple offers and better terms is common.

To get an inside track, it’s critical you have a broker who understands the process, works well with other real estate professionals, prepares a strong offer package (pre-approval, proof of funds, personal letter and family photograph) and is willing to do whatever it takes to get your dream home under contract. Otherwise, you may lose out on the perfect home buying opportunity.

Michael J. Libutti is a Broker and Attorney at Class Realty Group’s San Diego office. Reach him by email at mlibutti@classrealtygroup.com or by phone at 858-220-4295.