Suni and Ashwin Raghu are under contract on a four-bedroom, 2.5-bath home in Long Hill, N.J.. The expectant parents, who looked at close to 70 homes in the course of their search over the past three months, were a bit surprised to find themselves at this juncture. Six months ago, says Ashwin, they didn't think they were ready to enter the ranks of homeowners. "It was an opportunity," he says. "It's a good time to get in, rather than wait it out. I think home prices are about as low as they can get. And the interest rates are very low."
Buying a home is a big commitment. And for those who have never made it, it's daunting. Given the problems in the housing market during this recession -- from bad mortgages
to declining home values
-- many potential first-time buyers are hesitating when it comes to dipping a toe into the waters of homeownership. (See "How to Shop for Your First Home."
But more and more are eagerly signing on the dotted line.
Still, there are concerns. "We've never owned a home before, so we were not sure if we'd have the time and the resources to keep up with a house, especially with a new baby," says Ashwin, a project manager at a financial services company.
In addition, he says, "There is always the concern that one of us might lose our job. But that's true of any
economy." After weighing the pros and cons, he says, he and his wife (who is due to deliver their child in November) decided that the timing couldn't get much better. So they are hoping that their bid, in the $400,000 to $500,000 range, will be accepted. "I'm feeling pretty positive about this," he says. "I think, in this market, we are getting a great deal."
First-time-homebuyer jitters are not uncommon, says Suki Marsh-Shikiar, the Raghus' real estate agent and a sales associate with Weichert Realtors in Short Hills, N.J. "I meet a lot of people who come to open houses to look, but they are hesitant to buy," she says. "When I call them to follow up, they don't return my call."
However, she says, the ones that do respond are "ready, excited and eager to buy. If they've been pre-approved, they are ready to move full-steam ahead."
What keeps first-time buyers from getting into the market? There are a number of concerns that cause buyers to hesitate, according to Heather Gilheany, Marsh-Shikiar's partner at Weichert.
"The biggest problem is confidence in the general economy and job security
," she says. "Even while they are looking at homes, they are saying, 'Maybe we should just keep renting because life is so uncertain. We should stick with the lifestyle we know.' "
While there isn't much that she can say to relieve people of that fear, she does address others, such as the worry that a mortgage will have hidden fees and charges.
"We steer clients reputable mortgage brokers," says Gilheany. "Mortgage requirements are so stringent right now that even people who have good credit ratings and money in the bank are having a tough time getting approved." A reputable broker will ensure that the terms of your mortgage are clear and defined.
Concerns about whether home prices will continue to decline
are real, says Marsh-Shikiar. "But if someone is looking to buy a home, not a cashbox, they will do fine," she said. "The days of great appreciation in a home are over. If you think you will want to move in a few years, buying now is not a good idea. But if you believe you will be staying in your home for several years, now is a great time to buy."
The condition of a home is a huge concern for buyers. The Raghus were right to be concerned about keeping up with home maintenance. Bills can pile up fast. (See "The Hidden Costs in Home Buying."
A thorough home inspection will help alleviate those fears, said Gilheany. "Buyers are doing exhaustive inspections," she says. "Radon, oil tanks, roof, chimneys -- people are checking out everything they can before putting in an offer."
Finally, there is the concern that a better home might come along. "I always tell buyers, finding a house is a lot like falling in love," says Gilheany. "When they see the right house, they won't have any hesitation."
For the Raghus, despite some uncertainties, they found a home that they knew was right for them. And they didn't want to pass up a good time to buy. "The sellers were motivated, and willing to negotiate," says Raghu. "We got a very good deal; we wouldn't have been able to buy this house three or four years ago. With our life situation and the way the market is now, we decided this was a great opportunity we shouldn't miss."
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