Smart Moves: Homebuying 101: Tips for first-timers

It’s crucial for most young adults to wait until they have stable income — or substantial help from their parentsp — before taking on property ownership.
By Ellen James Martin Published: April 26, 2014
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As the owner of a large portfolio of residential investment properties — and head of her own realty firm — Karen Rittenhouse has guided her two sons on homebuying. She advised both to take the leap early, and they accepted her advice.

One bought a house near his campus at the age of 19. The other bought a condo the day he finished grad school, at 24.

“If you’re capable of buying, there are big benefits, including tax write-offs for mortgage interest and, ideally, future appreciation,” said Rittenhouse, author of “The Essential Handbook for Buying a Home” and other real estate books.

Rittenhouse said it’s crucial for most young adults to wait until they have stable income — or substantial help from their parentsp — before taking on property ownership. She says most should postpone if they expect to be moving in a few years. Also, she notes that people carrying a large amount of student debt can find it tough to obtain mortgage approval.

Even given those provisos, what makes a house purchase so compelling a step for many young adults?

Rittenhouse said rents are high and rising in many desirable areas, due in large measure to the fact that new apartment construction slowed substantially during the worst of the recession, resulting in a landlords’ market in many areas of the country.

“If you investigate the neighborhood where you want to live, you could find that it’s now as cheap to buy as to rent there,” she said.

Here are a few pointers for first-time homebuyers:

• Look beyond family members for advice on whether to buy.

Young adults often seek counsel from their parents when considering major life decisions. But Rittenhouse said that while most parents are well-meaning, few are knowledgeable about the current real estate market.

“Most people buy only about two houses in a lifetime. You can’t expect them to be up-to-date on all aspects of real estate, including home values and the mortgage approval process,” she said.

Fred Meyer, a veteran real estate broker who sells property near Harvard University, said that in addition to family members, young buyers are wise to look to professionals for advice.

He recommended that you start with a one-on-one session from a real estate agent who’s earned your trust. Also, find a reputable mortgage lender who will take the time to tutor you on the fundamentals of real estate finance and calculate how much you can afford to spend.

Joe Adamaitis, author of “Don’t Be Denied,” a book for mortgage borrowers, said that paying close attention to the loan approval process is now especially important for first-time homebuyers, given increasing federal regulations governing lending.