First Time Homebuyer? This Q&A Is For You

Buying a home for the first time can be overwhelming - the sheer number of decisions that need to be made can seem never ending. Knowing where to start can also be challenging if you don't have much experience buying property. The Williamsport real estate industry in 2023 is evolving at an unprecedented rate, yet there are many opportunities to help buyers navigate the world of real estate.  

A good starting point for first-time home buyers is talking to a local Williamsport mortgage company. They can assist in various ways, including helping you understand the requirements they need to meet before making an offer on a particular property. We spoke with D. Shane Whitteker, owner and chief broker at Williamsport mortgage broker Principle Home Mortgage to help first-time buyers in their search for the right property. 
 

Requirements for first time homebuyers
Mortgage lenders have strict financial requirements that first-time home buyers must meet to qualify for a mortgage, and some first-time homebuyers have financial constraints that prevent them from getting their dream homes. Sticking to entry level homes will also inevitably prevent entry into certain higher-end neighborhoods as well.  

Whitteker sees this demographic’s impediments to getting a mortgage hinging primarily upon inflationary factors. 

“In my opinion I think some significant challenges for both millennials and gen Z revolves around inflation of cost vs ability to earn,” Whitteker says. “Things link college tuition and higher education cost in general, the cost of owning a vehicle and the cost of owning a home have been rising compared to wage growth. This will shift in some ways but it does create more challenges to save money and afford a home.” 

 
Should I rent or should I own?
Owning a home can be a more meaningful experience to millennial and gen z first-time homebuyers because with ownership comes the ability to improve their homes. One can renovate their property at will, and getting the increased equity you gain from renovations is yours to keep. Over time, your mortgage payments will pay down your mortgage, and your home will likely rise in value. These things in combination will also increase the amount of equity you have in your home. Renting is paying someone else’s mortgage.  

 
I'm a first-time homebuyer - what mortgages should I consider? 
A mortgage is a loan used to buy property. Whether you're in Williamsport or anywhere else in Pennsylvania, there are many different types of mortgages available, and choosing the best for your situation is essential. The best plans for first-time homeowners are ones with a low down payment, reasonable interest rates, and a longer term. These mortgage options include the government-backed FHA loan or a conventional mortgage. They are ideal for first-time homebuyers because they allow for a low down payment and a low-interest rate.  

According to Whitteker, the right mortgage for you comes down to your specific circumstances. 

“The answer to this question really depends on a number of factors. The most widely used first- time home buyer mortgage is conventional financing. I think one reason for this is that real estate agents and sellers push to have people approved for conventional financing vs FHA financing even if this is not good for the buyer,” Whitteker says.   

With sellers losing some of their power in a down market though, some may be less averse to FHA mortgages in the future. 

“The market has been driven by sellers in the last three or so years, but as that changes we will likely see more first-time homebuyers using FHA and other government options for financing,” Whitteker notes.   
 
 
A small down payment is Ok
If a first-time home buyer does not have 20% to put down on a new home mortgage, they should look at the most affordable financing they can manage. According to Whitteker, one option is to speak with your local mortgage broker about government-backed loans such as FHA loans,  VA mortgages, USDA loans, and even conventional mortgages, because they offer very reasonable interest rates with low down-payments. 

“FHA, VA, USDA, Conventional and most state sponsored mortgage types do not require 20% down,” Whitteker says. “You will have to pay mortgage insurance without 20% down in most scenarios but this option certainly helps to fast-track homeownership.”  
 

Military service and mortgages 
Military service can impact a first-time home buyer's mortgage because of their unique situation. Depending upon your individual situation, if you qualify for a VA loan you won’t need any down payment, and you’re going to get a great mortgage unavailable to the general public.  

 
Can anything be done if I lost my home?
If you lost your home because of temporary hardship such as the pandemic, you can try to get a low down payment home loan. Government-backed loans such as the FHA, VA and USDA are affordable and can help you recover from losses.  

According to Whitteker there are options available to sometimes speed up your financial recovery time following this type of situation. 

“This can be a difficult circumstance,” Whitteker acknowledges. “If you can document certain types of hardship where there was a medical emergency or loss of job, you can sometimes reduce the length of time to qualify for a mortgage after what we call an adverse housing event.  This would include foreclosure, short sale, bankruptcy combined with foreclosure or bankruptcy on its own.” 

 
How can I build a home?
The mortgages used for new construction are almost the same as those used for existing home purchases. The difference is the down payment and the loan period. Home buyers looking for the best mortgage options should check the different plans and choose the one that works best. The advantage of building a new home is that it can be tailored to their needs. Construction mortgages include conforming, FHA, VA, and USDA.  
 

Should I buy now, or should I wait until interest rates maybe drop? 
If you're looking to move and you find the ideal property, it is wise to grab the opportunity and buy it.  If you buy now and interest rates go down later, you can always refinance, and your mortgage payment will also go down. Delaying the purchase may result in losing the chance to get your dream home.  

When it comes to home ownership, Whitteker says history shows it’s always a good time to buy.  

“In general, if you are buying a home as a long-term investment, there is not a bad time to purchase. I say this historically,” Whitteker says. “You can poorly time a purchase on the short term but over 5 years you typically will be back above the amount you paid for the home.” 
 

When should I buy? Should it be sooner rather than later? 
It is always better to buy a home sooner rather than later because it allows you to build equity, and enter the market while you can and before you wait too long and get priced out. Purchasing a home later means settling for the place you get, which may not be up to your expectations. 
 

What experts can help first-time homebuyers? 
First-time home buyers should research their local market and thoroughly examine the options available to them. They should be aware of the different financing options available by speaking with their local mortgage broker and choose the one that suits their needs best. It’s also a great idea to seek professional advice from a Williamsport real estate agent to help you buy your dream home. 

“I think it is a good idea to contact a mortgage broker to find out what options you have personally and what options you may have with bringing in family members or friends in the homebuying process,” Whitteker says. “I think it is a good idea to plan ahead and work towards a more rapid path of wealth accumulation and owning a home is a significant part of that process.” 
 
Home ownership is a huge milestone in a person’s life. It means building equity on your terms and living in a place that’s truly your own. However, getting there can be challenging. It’s vital to speak with real estate experts to help guide you through the process. Principle Home Mortgage specializes in helping their clients through the mortgage process. They are experts in Williamsport mortgages and can be reached at (570) 980-9359.