Starter Tips for Millennial Home Buyers

First Time Home Buying Tips for Millennials

Buying your first home is very exciting, but it also takes work. There are many financial and logistical obstacles to overcome in order to find a home you’ll be comfortable in, and one that’s in your budget. The process can be daunting, but don’t let it turn you off. Here are some steps to help you get started.

Talk to Experienced Home Buyers

You’ll need to do your homework if you want to purchase a home. One of the best ways to start is by talking with friends and family who have already been through the experience. Spend some time with your parents, grandparents, close friends or mentors to pick their brains about home buying. They may have purchased several homes over their lives and can impart what they’ve learned about the process, as well as the financial benefits of homeownership, such as tax deductions and building equity.

Determine if You Can Afford to Buy

It may seem obvious, but many people don't take the proper time to assess the amount they can spend on purchasing their next home.

Take a look at your finances and your budgets, and calculate the numbers on how much you can afford to put down on a house, the amount you need to finance, your credit score and estimated closing costs. Depending on where you are located you may actually pay less for a mortgage each month than you do in rent. Be sure to take into account ongoing expenses for homeownership, such as homeowners insurance, taxes repairs, and other expenses. All of these numbers are important factors in determining whether or not you can afford to buy. It’s also a good idea to get prequalified for financing before you begin checking out houses and make offers. The prequalification process is simple. You can shop online at a lender website and input your finance numbers and credit history to determine the amount you qualify for.

Find a Real Estate Agent You Trust

Your agent will play a big role when buying your first home, make sure you pick the right one for you.

Since you’re new to the process it is vital to find a real estate agent who is knowledgeable and trustworthy. An agent can help you determine what you can afford, show you homes, and can give you an overall understanding of the real estate buying process. Look for someone who is active, but can make the time for you. If you know any experienced homebuyers, it’s a great idea to ask for a recommendation. You can also search online for recommendations and reviews of agencies and agents. Make sure to vet and interview several different agents before settling on one. When you meet with real estate companies, have some questions ready for the agents, such as:

  • Can you provide recent references that I can contact?
  • How long have you been in the real estate business?
  • Have you worked with many first-time buyers?
  • How many buyers do agents work for at a time?
  • How many homes have you sold this year?
  • How do you determine which homes may match our wants and needs?
  • How do you provide information about these possible homes?
  • What are your fees and how do I pay?
  • How will you communicate with me?

Save for a Down Payment

The more money you can come up with for a down payment, the more favorable your loan terms will be. A typical down payment is 20 percent, but a larger payment can save you thousands of dollars over the life of the loan. To ensure you get the most out of a loan, there are several actions you can take:

Stick to your budget

Determine your monthly income and your expenses, then make a budget. Your leftover money should go to savings. This may be difficult at first, but staying on top of your budget and adjusting it as you go, will put you on a path toward saving for a house.

Improve your credit score 

You can get approved for a loan with a lower credit rating, but the better your score is, the better your rate will be rated. There are a variety of free apps, like Credit Karma, that will let you know your credit score, break down the grades and offer suggestions for improvement.

Pay down your debt

Buying a house is the most expensive purchase you’ll make, so it’s a good idea to eliminate as much debt as you can before you take on a mortgage. Try paying your debts in order from smallest to largest. As each debt is paid, you’ll be able to reallocate it and pay off the next smallest balance with additional funds. This method is often referred to as the snowball effect. Getting rid of your debts will then allow you to save all that money you spent to pay what you owed each month.

Ask for financial help

When you talk to friends or family about their experiences with home buying, consider asking for help with the down payment on a house. If your relatives can help boost the amount you put down, you’ll be in much better financial help long-term.

Exercise Patience

We know, it's exciting to purchase your starter home. But as always, look before you leap.

Once you make the decision to buy you’ll be invigorated and ready to find a place as soon as possible. But don’t be in a rush to find a home. Before you even start viewing houses, create a home buying checklist to prioritize what you’re looking, from absolute essentials to “nice-to-haves.”  Take your time and look at as many properties as you can, so you can figure out what you really want, don’t overpay, and don’t get stuck with something that doesn’t fit your lifestyle. If you do start a negotiation process with the owners, make sure you are happy with all the terms before committing to buy. You don’t need to settle. There will always be another house.

Leave a Reply