Navigating new waters: How climate change can affect first-time homebuyers

Buying your first home is exciting, but let’s be honest, it can also feel overwhelming. There’s already a lot to take in between saving for a down payment, figuring out your budget, and learning mortgage terms. And now, there’s one more factor first-time buyers need to keep in mind: climate change. According to a recent CNBC article, climate risks are starting to play a role in how lenders look at your mortgage.

Here’s how it works: as natural disasters like floods, wildfires, and hurricanes become more frequent and more intense, they’re making some areas riskier for lenders and insurers. That means insurance premiums are increasing, coverage is harder to find, and in some cases, lenders are becoming more cautious about approving loans for properties in high-risk zones. That can affect how much you can borrow, and possibly your credit score.

So if you’re in the early stages of buying a home, especially in more high-risk places, it’s worth looking at how the climate might impact your purchase. Here’s what you can do to stay ahead of the curve:

• Do some homework on the property: Before you fall in love with a home, check out its risk profile. You can use free tools like Risk Factor by First Street Foundation to see if the property is vulnerable to flooding, wildfires, or extreme weather.
• Look at the insurance situation: In high-risk areas, homeowners’ insurance can be pricey, or even hard to get. Make sure you understand what’s covered and whether you’ll need extra policies, like flood insurance. Those premiums can add up fast and affect your overall budget.
• Think long-term when it comes to location: Beachfront views are beautiful, but they could also come with higher risks (and costs). Sometimes, choosing a home in a less disaster-prone area can help you save in the long run and protect your property’s value.
• Consider upgrades that boost your home’s resilience: If you’re buying a house in a riskier area, you may want to invest in improvements that protect against climate threats, like fire-resistant materials, elevated structures, or better roofing. These upgrades could also help lower your insurance bills.

The good news? You don’t have to figure all this out on your own. At Primary Residential Mortgage, Inc., we’re here to help you navigate every step of the homebuying journey, including how to prepare for climate-related financial considerations. Our team of experts is ready to guide you through the process and help you make confident, informed decisions, no matter what the forecast looks like. https://www.primaryresidentialmortgage.com/