First Time Home Buyers

You may have been told by a real estate agent that you will date the rate but marry the house. The idea of buying a house now and planning on refinancing to a lower rate later on does carry some risk.

Mortgage interest is front-loaded, which means that the borrower pays the most interest on the first payments. Refinancing means starting over and paying more toward interest and less toward capital, which means less equity.

As a rule of thumb, wait until rates go down by 2% before refinancing. That way, refinancing will pay off. Rates will not go down much while Trump is president due to his economic polices.

People who buy houses now have no guarantee that when rates are lower in five or six years that they will have a job. Jobs come and go but mortgage payments can last for decades, which is one heck of a long date.

Buying a less expensive house is one way to keep mortgage payments lower. Another strategy is to save up for a large down payment.

When the news headlines exclaim that mortgage rates are lower, that doesn’t mean they are low. It means that they were recently higher. Right now, they are about what they were a year ago, when they were at 6.77%.

These rates are averages. You may qualify for a lower rate or for a higher rate. Ask your lender.

tachment_27870″ align=”aligncenter” width=”900″] Freddie Mac – average rates[/caption]

The median size of a newly built single-family home in the first quarter of 2024 was 2,140 square feet, according to the U.S. Census Bureau. During the same time period in 2023, it was 2,256. That shrinking trend tracks with data collected by the NAHB and the U.S. Census Bureau’s Survey of Construction.

In 2023, the median size of a new single-family home was 2,233 square feet, down 9% from 2015
In 2024, the median size of a new home was 2,179 square feet, the lowest since 2010.

Why are homes getting smaller? For years they were getting bigger. Buyer demand for small homes is up, partly due to lower costs.

As the owner of a small home with what I call a “micro kitchen”, I have always felt that smaller is better. Smaller means less cleaning and maintenance and less space to heat. It can also mean less storage space for storing all that excess stuff.

When I look for houses that I would like to own I am always looking for homes that are smaller than what I have now. Yes size does matter. It really is a matter of personal preference. Space costs money and it takes time too.

As does the “micro kitchen,” it has an efficient layout. It is a galley-style kitchen that opens into a dining room. There is plenty of food prep space because of an antique kitchen queen with a pull-out counter just outside the kitchen.  There is enough cupboard space but some of it is in the dining room. I have too many pots and pans and have started moving the cookware I do not use to some shelves in the basement.

Most people don’t keep a case of creamed corn and a large Dutch oven under their antique buffet in the dining room but it works for me.

One thing we learn from living in a small house is how to get the most out of verticle space and we learn to put our stuff away to avoid that cluttered look.

When searching for your “dream house” dream smaller and enjoy the advantages of having less house.

In Minnesota, we have used buyer representation contracts for a few decades. Home buyers who are working with Realtors are required to sign an agreement with their agent. The agreement outlines the Realtor’s duties and how they will be paid.

As of last week, Realtors are required to have a written agreement with people who want to tour homes we listed for sale.

Previously, we could show anyone our listings without a contract or agreement with people who want a tour.  On the plus side, this new practice may weed out the holiday housing tourists who are just curious and have no intention of buying a house.

On the other hand, home buyers hate to sign anything, making it a struggle. It is easier to sell a house if we can show it to anyone interested without paperwork. I do not plan on charging anyone anything for showing my listings but I could and the new system makes charging a fee easier.

The good news is that contracts or agreements buyers sign with Realtors do not require the signer to buy a house. You can sign an agreement with a Realtor to go house hunting but that does not obligate you to buy a house.

We did not work with a buyer’s agent when we bought our first house. At the time we thought that we came out alright. We did not know what we did not know.

With the help of a buyer’s agent, we may have paid less for the house and if we had made an inspection contingent offer we may have been able to negotiate some repairs.  The seller’s agent wrote our offer, she was helpful but did not negotiate or work on our behalf.

It wasn’t until many years later as I started working as a real estate agent representing buyers that I realized we missed a few things when we bought the house.

Buying a second or a third house is a little easier but each house is unique and so is each seller. Rules and laws change over time. If you bought a house twenty years ago you might not be aware that laws have changed.

No, you don’t have to have a buyer’s agent representing you but most home buyers need one.

Choose an experienced agent. An inexperienced agent can be worse than no agent at all.

If you choose to go it alone consider consulting a real estate attorney.