Tips for Millennials Buying a First Home
As the younger generations start coming into the age where one would typically buy a home, that is not really happening as much anymore. Previously, many people sought out starter homes, where they could plant some roots in a community, before moving on to a bigger and better house. However, the millennial generation is quite different, especially when it comes to buying their first home.
While this is not always true, a broad range of millennials are a part of a far more mobile society. Settling down and planting roots are not as important, or simply not the first priority of many millennials. Travel and freedom are important, and owning a home is not the same status symbol that it used to be. Of course, this doesn’t mean that there aren’t any millennials that don’t want to buy a home, but the approach is much different. If you are a millennial looking to buy your first home, there are some tips you’ll need to think about, to decide if buying a home is the best choice for you.
Can You Afford to Buy a Home?
The initial assumption shared by millennials and younger generations is that they simply cannot afford to buy a house. A large part of this is that they are typically just graduating from college, which means a lot of student debt, and very little savings. But you don’t need to despair just yet.
Buying a home is a daunting prospect. There is a lot that goes into buying and owning a home, and the forefront of which is money. Traditional loans require at least 20 percent down, in cash. If you have just graduated from college, you likely don’t have that kind of money. However, there are plenty of mortgage brokers, bankers, and lenders that are able to provide good loans, even if you might not have that big down payment. If this is your first home, you’ll have the option of getting an FHA loan, which requires as little as 5 percent as a down payment. That is much more manageable than 20 percent.
Of course, with less money down, your monthly payments will be higher, and you will likely be paying more interest over the life of your mortgage. This is where having a high credit score helps. In order to pay less interest, you need a good interest rate, and credit helps you get that low interest rate. Don’t assume that you can’t afford a home. Look at your options, and see if it makes sense financially. Sometimes, buying is better than renting.
Use a Good Local Real Estate Agent
Just because you can find the house of your dreams without living your current residence, thanks to the internet, doesn’t mean you shouldn’t use a real estate agent. You need a good local agent on your side, not only because they will fight for you, but because they have years of knowledge. Knowledge of the market and the financial side of real estate. Both of those are invaluable in helping you find the best house, and more importantly, the best house that is in your budget.
Emotions can play a large role in buying a home. However, emotions can cause you to make irrational decisions, and get stuck in a house that costs way too much, or really is not right for you. Your real estate agent will be a voice of reason to help keep you grounded in reality.
Ask for Advice
Do you have friends or family, like your parents, that have bought a house before? Use them; their experiences will prepare you for what you’ll be going through when you are buying your first house. Of course, they might not have the technological experience, but they understand the financial side of buying a home, and that is important information.
Don’t Rush It
Buying a home is a big decision. It is bigger than buying a car, or potentially even deciding whether or not to go to college. Like college, you took your time deciding. You didn’t rush into it, like you would buying the newest smartphone. You need to take your time when buying a house, and don’t rush into a decision. Slow down, and think about it. Use your local real estate agent, the internet, and any other resources you have to learn as much as you can about the real estate market.
Learn about your options. Take the time to get preapproved for a mortgage. It saves a lot of time and headache in the future. Plus, getting preapproved lets you know what your budget is, so you’ll have a better understanding of the home that you can afford. Knowledge and patience are two of your most valuable tools in buying a home. And, of course, a good local real estate agent.