The First Time Home Buyers Journey In the Twin Cities Real Estate Market

Spring in The Twin Cities metro is about temperatures rising, flowers blooming, green lawns, residents hitting the biking and walking trails in large numbers and the real estate market in full swing. There are plenty of buyers out there and if you are one that has decided to take the plunge and buy a home I applaud you for beginning the journey towards home ownership.  For those of you who have yet to take that first step but are seriously thinking about doing so, I’d like to help.

First let me say I fully understand the decision to transition from renter to owner is not an easy one. The purchase of a home is for most adults the largest financial investment of resources in their lifetime. It’s not a small deal, it’s a big deal and should never be minimized. Not to mention that buying your first home can be a very scary thing, and believe me you don’t have to be a virgin home buyer to get those jitters. There are the practical considerations that need to be explored such as your personal financial situation, market conditions, and future plans. You will also need to ask yourself some hard questions about how much change to your lifestyle in terms of responsibility you are ready to embrace.  

Many moving parts need to come together in the process before that initial green light comes on that flashes “buy”. Like a puzzle, the whole picture will materialize when we fit together all the pieces. For some, it may be that at least for the present time, renting is the preferable or only option and for others buying may be the obvious best choice. Everyone is unique and each situation is different.

For starters, you should ask yourself if you plan to stay in the area and for how long. If you anticipate a job relocation in a couple of years, you probably would be ill-advised to buy a home since you would most likely not gain enough value in that short a time to cover the costs of selling. If you plan to stay for a few years, then buying can be an option.  Run your numbers through a Buy vs Rent calculator to see which is more expensive and at what point buying becomes less expensive than renting.

The First Step to Homebuying in Minneapolis and St. Paul, MN 

Please consider the following 3 questions and answer them honestly and carefully to help determine if you are emotionally, financially, and realistically prepared to begin the journey of buying a home.

Are You Emotionally Ready to Own a Home in MN?

For most people, home ownership is still a large part of the American Dream. It is a rite of passage and the superhighway into adulthood.  It imparts a feeling of permanence, stability, and security.  Regardless of whether your vision of home is a trendy loft, a townhouse, or a single famil,y it is your personal safe haven, an anchor and a tangible, brick and mortar symbol of your independence.  Those are just a few of the many emotional reasons we are drawn to homeownership. Each represents a different lifestyle choice and level of commitment beyond the financial one.  So if your internal compass is pointed towards that home of your own and your heart confirms it, you may be emotionally ready.

Are You Financially Ready to Own a Twin Cities Home?

The first financial task is to get a clear snapshot of your debt as a percentage of your income. This is important because the banks and mortgage companies have lending guidelines as to ratios of debt to income. You should pull your 3 free yearly credit reports and determine your FICO score as well. This score along with two others will determine not only whether you will be eligible for a home loan but the rate of interest you will be offered but it will have an effect on the other terms as well such as the percentage that will be required as a down payment. Which brings us to the question of how much cash have you saved for a down payment and closing costs? 

There are many online calculators as resources which can provide you with an idea of how much house you can afford. I like the one on Bankrate.com but you can also find them on many other sites like Zillow and Realtor.com.  However, it is a good idea before you begin a serious search for a home to talk with a lender.  In today’s market, you will not be considered a serious buyer if you do not get pre-approved anyway. 

Are You Ready to Embrace the Responsibilities of MN Home Ownership?

Part of the package of home ownership is accepting more responsibility.  A mortgage is a legal contract that you need to take seriously. Also important is understanding that means taking on more responsibility for maintenance like mowing in the summer and shoveling in winter at the very least. It also means having money set aside for unexpected emergency repairs that are inevitable when you own a home.  Going from renting to owning is a major lifestyle change. Soul searching as to how you feel about giving up leisure time that you currently spend on recreation in order to nurture the investment you made in your home is critical. Knowing what is expected and being realistic in your expectations of yourself is definitely preferable to the bitter pill of buyer’s remorse.

After careful analysis of your expectations, finances and lifestyle you decided this is not the right time for you to take that leap into home ownership just remember to be patient. You will know when the time is right. If you are being held back by finances or credit issues and low FICO score, a lender should be able to help you devise a plan to clean up your credit and improve your numbers. If you don’t have enough cash, start a plan to save more today.

If you answered yes to all three questions congratulations. You are ready to embark upon an exciting journey. Buying your first home is a real thrill and generally a memorable event. Don’t forget to get an agent to work for you and help you maneuver through the ins and outs of the market. Home ownership not only feels good but it can provide an opportunity for long-term financial gain and independence. In most cases, it is less expensive than renting in today’s market, and you get savings on your taxes too! As an added bonus, no more upstairs neighbor that sounds like he is throwing the Mad Hatter’s Tea Party over your head and finally, you will have enough closet space for all your shoes! 

Start looking for your dream house using our MLS Online MN Home Search  which allows you to search by every parameter imaginable. If you find a home you would like to tour, or if you have any questions give me a call. Nothing gives me more pleasure than helping a first-time buyer realize his or her dream of buying that first home.