APPLETON (NBC 26) — Buying your first home is a major financial milestone, but rising housing costs and mortgage rates are making that milestone harder to reach for some buyers in the Fox Cities.
From saving for a down payment to navigating lender fees and monthly mortgage payments, first-time buyers face financial decisions that can have a lasting impact. But local real estate professionals say understanding those costs and exploring available options can make homeownership more attainable.
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Ashlyn Pitz knows the homebuying process from both sides. As a real estate agent for CENTURY 21 Ace Realty, she helps people find their dream homes. But when it came time to purchase her first home, she discovered there was still plenty to learn.
"I did have a good knowledge of kind of what I was doing, but I was surprised by certain things, too," Pitz said.
One of those surprises was how much fees can differ depending on the mortgage lender. Pitz said comparing lenders helped her better understand the costs associated with buying a home.
"I mean, they're very different when it comes to lender fees, so that's one of the biggest things that we did was, you know, shop around a little bit," Pitz said.
But before buyers can compare mortgage options, many face another challenge: saving enough money to get started.
Stacey Hennessey, broker-owner of Acre Realty, said the cost of everyday living can make putting money aside for a home particularly difficult, especially for people who are already paying rent.
"So between the payment, the rent that they're paying, it's hard to save for a down payment," Hennessey said.
While a down payment can be a major obstacle, Pitz said first-time buyers may not need to save as much as they initially expect.
"Typically, in our area, we're seeing only, like, 3 or 5% down," Pitz said.
For example, on a $300,000 home, a 3% down payment would be $9,000, while a 5% down payment would be $15,000. The amount required depends on the buyer's loan program and financial qualifications, and closing costs can add to the money needed upfront.
But getting the keys is only part of the financial commitment.
Mortgage rates also play a significant role in what homeowners pay each month. On a hypothetical $300,000, 30-year mortgage, an interest rate increase from 6.4% to 7.4% would add approximately $200 to the monthly principal and interest payment, before property taxes and insurance.
Hennessey said that's why buyers should focus not only on what they qualify to borrow, but also on what they can comfortably afford each month.
"Don't ever reach so far that you're house poor. You still have to enjoy life," Hennessey said.
For first-time buyers, that means looking beyond the purchase price and preparing for the expenses that come with owning a home.
While today's market presents challenges, Pitz and Hennessey say understanding mortgage options, comparing lenders and setting a realistic budget can help prospective buyers take the next step toward homeownership.
