Buying Their Very First Home

N. Scott Trimble/The Columbian

Real estate agent Hartwell Saunders, left, and Washougal home buyers Michael and Amanda Lomax will be featured next year on an episode of “My First Home,” a reality television show about buying a first home.

As if buying a first home wasn’t nerve-wracking enough, Washougal newlyweds Michael and Amanda Lomax went through the process in front of a rolling television camera.

“It was fun, but it was stressful,” said Amanda Lomax, a 24-year-old elementary school teacher.

The couple’s home search will be featured early next year on TLC’s “My First Home,” a show that follows first-time buyers from the time they first start looking at properties until they buy a house and sign all the documents. The Lomax’s were guided through the home-buying process by real estate agent Hartwell Saunders with the Camas office of Century 21 Cascade Pacific.

The couple ended up buying a two-story house in Washougal, where they hope to eventually raise a family, said Michael Lomax, a 24-year-old construction worker.

“Buying made more sense than renting,” he said.

However, Saunders advises first-time buyers not enter into the experience lightly.

“If you’re not financially stable, you shouldn’t rush right into buying a house,” Saunders said.

So how do you know if you’re financially stable?

For starters, Saunders asks clients how long they’ve been in their current job and whether it’s secure. Ideally, lenders look for borrrowers to have been in their current job two years, according to the Home Loan Learning Center at homeloanlearningcenter.com. If you’ve recently changed jobs but are still in the same line of work, that shouldn’t present a problem, especially if the change resulted in a pay increase, the Web site says.

Most experts advise first-time buyers to also consider their current ability to live within a budget. Prospective buyers with credit card debt, for example, may not be living within their means. They also suggest buyers think beyond their immediate situation and look at the likely scenarios for their personal and work lives in the next few years. Buyers should determine whether any of these situations would necessitate a move or a change in income or housing needs and whether the house under consideration would be suitable should these changes come about.

Among the most important scenarios to consider is how long the buyers expect to stay in the property they plan to purchase.

It doesn’t make sense to buy a property and then move again in a couple of years. Not only can buyers expect to pay thousands of dollars in closing costs on their mortgage, which takes time to recoup, but there are also costs associated with selling, including paying a sales commission of up to 6 percent of the selling price.

Paying for the home should not require an exotic mortgage, either, Saunders said.

“The biggest portion of our loans are conventional FHA (Federal Housing Administration) loans,” Saunders said. He recommends this form of financing, especially after so many people got into trouble with other types of loans in the past few years. Saunders said buyers considering an alternative loan, such as one with an interest-only payment or an adjustable rate, should imagine the worst-case scenario and see if their budget can handle it.

“The first thing to think about is whether they’re getting into something that’s over their heads,” Saunders said.

He also advises new home buyers to account for expenses beyond the home purchase. That includes what it will cost to move and how expensive it will be to furnish the new home with essentials such as window treatments.

Buyers who purchase a “fixer-upper” with big dreams of remodeling should be especially cautious, because the costs can really add up, Saunders said.

“It’s not a good idea just to think about what’s the minimum they need to get by, because realistically, we don’t live that way,” he said.

Saunders said he usually suggests that prospective home buyers consult with a lender to draw up an estimate of what their budget will be after they buy.

There are guidelines first-time buyers can use to determine what they can afford.

Bankrate.com’s tips for first-time buyers suggest that a homeowner’s total monthly mortgage payment — including the principal, interest, taxes and insurance — shouldn’t exceed roughly 30 percent of the buyer’s monthly gross income. In addition, the financial Web site suggests having a large enough emergency fund to cover a major home repair, unexpected expense or temporary loss of income.

Another key consideration: Home buyers need to save for a down payment. Saunders advises his clients to have between 15 percent and 20 percent of the home’s purchase price saved up.

“The person who saved up that type of money is the same person who is going to pay off their loan,” he said.

Michael Lomax said he and Amanda felt a sense of pride in saving up the down payment for their home.

“Live with your parents as long as you can and tough it out,” he said.

Even with a stable job, there are no guarantees in life, which is why Saunders tells first-time buyers to continue the habit of saving.

“Life is unpredictable, whether it be your job, the economy or an unforeseen accident or medical expense,” he said. “I advise them to not only have a savings account, but an emergency fund. That’s a great idea for first-time home buyers.”

Cami Joner covers real estate: 360-735-4532 or cami.joner@columbian.com. The Associated Press contributed to this story.