Millennials were coming of age just as the Great Recession hit and the housing bubble exploded. Many were turned off to home ownership when they saw their parents and grandparents struggle with foreclosures, short sales, or onerous adjustable rate mortgage (ARM) payments. Reluctance to enter the real estate market was compounded by the other unique struggles facing young people today: high student loan debts, unemployment or underemployment, stricter mortgage requirements, etc.
Nonetheless, the dream of home ownership shouldn’t be over. Young people today have an advantage that older people didn’t – dramatically low mortgage interest rates.
Here are some tips and tricks that will help you to avoid common buying mistakes.
Millennial Home Buying Cheat Sheet
Find a Professional
If you are under age 35 and thinking of buying a home, then you are already surpassing your peers.
But home buying can be complicated, and you shouldn’t do it alone. You’ll need help navigating the process. To get a good deal, you will need to get a good real estate agent. It is absolutely essential to find an agent that knows the area and the schools.
Don’t put yourself at the mercy of a bad agent. Most of your information about homes or the buying process will come from the agent you select. Be sure you interview a variety of Realtors before you make your final choice. Remember that that agent must work for you, and should meet your criteria. Don’t feel guilty if that means saying no to your mother’s friend’s cousin’s hairdresser. A lot of your money is on the line!
Ask tough questions. Be sure your potential agent has the skills you need to fit your circumstances. Has she worked with other first-time home buyers? Does this Realtor have past clients you can contact? How many buyers does the agent work for right now? Try to find someone with current experience, but who has time for you.
In the end this is your money and you can spend it however you want. There is no reason to settle for less than the best.
Worried about paying a real estate agent? Don’t be – if you’re buying a house, your buyer’s agent is compensated by the owners of the property you buy. And with recent changes to federal law, you must be fully informed of all costs of purchasing your home before you sign on the dotted line. That means there won’t be any surprises on the day of closing.
Consult Friends & Family
Talk to friends and relatives who care about you, and who have already purchased real estate. They will tell you what they did right, and what you should avoid. Some may even offer to help with your down payment. In general, you can get better mortgage terms with a higher down payment. This could save you piles of money over the life of the loan.
Identify the Best Locations
Location, location, location! Location will have a profound effect upon your ability to sell the property in the future. Not much will influence the value of a home more than its location. You might adore a home because of its beautiful character, but if it is located next to a sewage plant you’ll have trouble selling it later. You must always weigh the property’s characteristics against the neighborhood’s crime rate, school data, and convenience.
Do you know which costs to expect when purchasing a home? Are you prepared for earnest money deposits, mortgage insurance, home inspections, termite reports, or closing attorney fees? A good agent will guide you through these costs and tell you what is reasonable, what is expected, and what is irrelevant.
Do you know the expenses of home ownership? Are you familiar with normal expenditures of owning property, like fixing appliances, paying property taxes, or landscaping? Again, a decent Realtor will be ready when you think about these items.
What House Makes Sense For Me?
There are lots of different kinds of property: single family homes, condos, farms, duplexes, co-ops, etc etc. Which one meets your needs? Are you in the military and need a low maintenance home for when you’re deployed? Do you own five dogs and need a big yard? You and your agent should think carefully about what you need most.
Take Your Time
This is a huge decision! Be patient and find the perfect home for you and your family.