“How can I purchase a home?” is the question many millennials are asking themselves. Millennials have been forced to look at the purchasing of real estate in a very different lens than the generations before them. The recent real estate recession is still all too fresh in everyone’s memory, and when coupled with student loan debt, high unemployment, and much tighter loan requirements, the very idea of owning a home can seem very unnerving, or even impossible.
Well great news — it isn’t. Those in their 20’s and 30’s that have considered buying a home are in a position to capitalize on extremely low interest rates. Historically real estate has been a very safe investment that has benefited many people. And just like every recession before this past one, the market always bounces back to a varying extent.
Owning a home can be a long term investment that will really pay off for you later in life. Take a look at our 7 must know tips before you start your home search!
1. Seek help from a professional: If you are in your 20’s and are thinking about buying a home, you are already very ahead of the game. To get the most out of your home buying decision, you should hire a professional. A great example of this is that if you buy a home with road noise, it may not disturb you at all, however it will be much harder to resell in the future and might yield less of a profit. While living in an internet-centered world means that also any information you need is right at your fingertips, this is one life decision you don’t want to do alone.
2. Pick an agent who you can trust: Although most millennials are very knowledgeable about the internet and are used to researching anything they need to know, a good real estate agent is invaluable during the home buying process. While you can certainly research homes you want to see with the click of a mouse, your agent has the industry experience and negotiation skills that will help ensure you get the best price for your dream home and that the transaction is as smooth as possible. Selecting an agent you trust is of the utmost importance and you should interview several agents before deciding on one. This may seem like common sense, but many home buyers go through family, friends, or a google search. While this may provide comfort in the short term, it could end up being a hindrance in the long term. Be sure to read online reviews not only on the agent’s website, but also independent review sites like Zillow or Trulia. Choose wisely!
3. Identify great locations and neighborhoods: A lot of first time buyers don’t realize just how important location is in real estate. It is the single most important factor that not only affects value, but determines how easy it will be to sell your home at some point down the road if / when you choose to do so. You may love the attributes of a particular home, but not have the foresight required to know that it might not be a smart investment.
4. Understand immediate and long term costs: There are many different costs that factor in to buying a home such as the mortgage application, mortgage insurance, home inspection costs and much more, which can add up quickly. Aside from these short term costs, many first time home buyers don’t budget properly for long term costs and expenses that come with owning a home. With knowledge of all the various costs and fees, you can plan more effectively.
5. Decide on what type of housing makes the most sense / Thinking towards the future: A major decision many face is deciding between buying a condo or a home. This requires planning for both the now and the future, which is what makes this stage rather difficult. You need to weigh your current life with the life you will most likely want to cultivate in the future. What does your 5 or 10 year plan look like? That influences everything from where to buy (good schools or not), what to buy (house with lots of extra rooms), and what kind of mortgage to get (30-year fixed vs ARM). Someone who’s buying a house for their family to grow up in looks different than someone with no immediate plans and different still from someone who is buying now, but is on track to make a lot more money in 5-10 years…they might consider moving up in 5-10 years before those kids ever really factor in the picture. Because San Diego can be expensive, it’s very important to make a good move now to set yourself up well for the future.
6. Choosing a fixer upper or a turn-key home: Another thing home buyers need to think about is what they will want to do with their property. Do you want something that will be just as you like it right when you move in? Or maybe you’ve always had dreams of designing your own home. This is a factor that many first time home buyers don’t consider, and should have some serious thought put into it.
7. Be patient: This may go without saying, but buying a home is a major life decision and needs to be treated appropriately. You should do copious amounts of research and really think about what you want, both now and in the future. Taking your time to familiarize yourself with the home buying process will allow you to make much more knowledgeable decisions. And remember, you can look at as many houses as you want to, and can make offers on ones you are interested without actually committing if you are unhappy with even the slightest detail. You only want a house that you will be truly happy with!