7 Mistakes to Avoid When Buying a Home at a Young Age: Millennials
Lately I have gotten a lot 20+ year olds that are interested in home buying. This is contrary to what the public believes about the Millennial generation; they are very interested in housing. Despite what the media reports about them living with their parents till the age of 40 my experience tells me otherwise.
If you are in this category, young couple or young professionals, and looking to buy a home here are some tips and tricks to look out for before buying your very first home:
Location of your new starter home is vital to your future. Your goal in housing should always be long term but you don't know where life takes you and what type of plans will unfold in the future. For resale value alone location is key. You have to sell it and that takes time unless you are in a market where the turn around times are high then you have lucked out.
Checking out the neighborhood before buying is key. Does it have shops, restaurants and close to transportation? Think about buying as if you were going to sell the home or condo in a year especially if your are single and plan to marry one day. Also your future buyer might be a younger you. If you are looking to one day sell to another young millennial buyer a good deal of importance in being close to urban necessities and entertainment.
Make sure your are ready to buy. It really is a mindset. Maybe you're tied of paying over $1,000 in rent. But are you ready to pay a mortgage instead? Make sure that what you have going in your life allows you to really invest in a home. I had a client purchase a condo and he was never home. He was either at work, school, work-school he never enjoyed his home and it became a burden. He wanted to go on vacation but he was concerned about the mortgage payment and someone looking over the property for him.
If its not the right time for you don't do it. Rent for while till you plan out what you want to do with your life and what goals you have for the future.
3. Be Realistic
I had a client named Mary who was going to the University of Illinois. She was adamant about getting a town home while she went to school that would only be steps away for her convenience. She wanted to be walking distance to everything from her home. Little did she realize that homes near a University were twice as much as those located a short distance from the school. Of course this wasn't in her budget so she had to get a condo that was not so close to the school and a lot cheaper.
Make sure you look at what your really can afford so your not struggling to pay each month. Also if you have tight budget look for fixer uppers that only need cosmetic work. If you can afford a habitable home within your budget then make sure you look at kitchens and bathrooms for the re-sale value, updated bathrooms and kitchens aren’t simply an aesthetic desire for the Millennial or future homebuyer.
Also, if you are buying a condo make sure you look at the home owner's association fee, will this amount break your budget?
4. Size Matters
When you first buy a home you might be looking for something super small and within your budget which is great but just think about the re-sale of your home, will you be there forever?
If you are trying to sale to another Millennial they want things to be faster, better, updated and so forth, their average home purchase was the smallest among generations. The Millennial home purchase was typically 1,720 square feet. Size was the second biggest compromise homebuyers made in 2015 but they would rather have an updated home in a great neighborhood, near high-rated schools even if they have to compromise on square footage.
Remember now-a-days not having a home office is a deal-breaker, many telecommuters, including Millennials, desire a home with workable space for a home office. The home office is the Millennial’s kitchen desk, but we’re guessing this “trend” may become more of a staple.
Make sure you shop around with the at least 2 lenders, I don't recommend you go crazy mortgage shopping because the more you get your credit checked the faster the score will come down. Find out your options. If you are looking for a condo it's best to get a conventional approval as many condo buildings are not FHA approved.
For the love of god please make sure you have some money in the bank it is unrealistic to think that you can buy a home with only $500 in the bank. SAVE! SAVE! SAVE!
6. Miscellaneous Costs
Many new young home owners only think about the down payment but forget about the miscellaneous cost like the home inspector, attorney fee, appraisal fee, mortgage application fee etc. If you are buying a condo there is a move-in-fee and these fees can range based on the size of the building. Make sure you have money in the bank for these miscellaneous expenses otherwise you won't be able to get the place you've always wanted.
7. He Said. She Said.
There is s saying about he said, she said. Forget the hearsay from you girlfriend, mother, father, boyfriend. You must choose the home you want because it is going to fit your needs and wants. Even though your family member, friend or significant other might be helping you with some cost if you are the only one on that loan then you must LOVE where you are going to live. The worst part about owning a home is coming to your place and hating where you live and not enjoying yourself after a long day of work. Everyone will there own opinion about the home but ultimately you make the decisions.