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First Time Buyer


Can I buy?  Should I buy?  Why???

Orange County First Time buyers – Buying a Home Makes Sense: Here’s How…

Owning a home is a big responsibility. Many people fear the responsibility and don’t think that they can own a home. This website is designed to help you consider your options, and guide you in deciding whether being a homeowner is for you. In many cases, if your credit is half way decent, you can qualify for a loan. With responsibility comes reward, and you’ll see how that happens here. Whether you are good at math or not, in most cases being a homeowner adds up in the end.

First of all, take a look at the graph below.  It shows the median home value for a single family residence in California:

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Overall, the graph above has a positive slope.  It is also important to note the amount of consecutive negative years, vs. the amount of positive consecutive years.  This shows you how being a homeowner adds up for your benefit, EVEN in the short term for most cases.  If you purchased a $200,000 home here in 1998, right now you could sell it for over $600,000 – asignificant profit!!!  In addition, if the market continues to flourish at an annual gain of 3%, the average home will increase in value:

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As your equity goes up like the charts prospect, and your loan amount goes down with mortgage payments, your bank account gets bigger!  This is the beauty of being a homeowner.  The graph below illustrates the value of your home (grey) on the same graph as your loan balance (yellow).  As you can see, the distance between the grey and yellow lines gets larger every year.  Think of that as your bank/equity account growing.  It just adds up!!

Click to enlarge

Another important note about buying your first home is to remember the way appreciation works…its very similar to interest on a bank account.  Sometimes its even better than interest on a compounded bank account!!!  Why?  Because you probably don’t have a lot of money in your bank account – most people don’t now-a-days.  When you “own” a home you receive rewards/interest/appreciation on the VALUE of the home, not the amount of money you have put into it.  Why is this significant?

Put 10K in your bank account Put 10K down on a $300K Condo
Year 1 @ 3% interest = $10,300 Year 1 @ 3% appreciation = $309K
Year 2 @ 3% interest = $10,609 Year 2 @ 3% appreciation = $318K
Year 3 @ 3% interest = $10,927 Year 3 @ 3% appreciation = $327K
Year 4 @ 3% interest = $11,254 Year 4 @ 3% appreciation = $337K
Year 5 @ 3% interest = $11,592 Year 5 @ 3% appreciation = $347K
5 Yr Cashout Amount = $1,592 5 Yr Cashout Amount = $47,000

This is the secret Homeowners understand, and renter’s don’t.  When you own a home you are making money off of the VALUE of your home, not the amount of money you have invested in it.  It’s a little like your rich uncle giving you the interest off of his bank account!  You didn’t have to put in all the money, but you do reap all the rewards 🙂  A great resource which will explain this even further is David Bach’s “The Automatic Millionarie Homeowner” book.

Yes, depreciation (home prices going down) is always possible, this is why its important to talk to your financial advisor, a REALTOR, and your lender so you make sure you don’t get into hot water over the short term.  Keep in mind just talking to ONE of these people could give you a biased opinion in the direction that pads their pocket…you need to consult with ALL.  If you don’t have a financial team of experts – don’t worry – we can refer you some!

As we mentioned previously, owning a home is not always easy.  That’s why this website is here to help!  In this section you will find links to everything a first time buyer may need to research. This includes lenderscreative financing tips, a real estate glossarylistings in Orange County under $300,000, community demographics, roommate connection, and more. If you decide owning a home is something you’re interested in pursuing, please call or email us. If you’re still deciding if Orange County, CA is where you’d like to live, click here for an exclusive community guide.