As a millennial, you succeeded against all expectations! You managed to save enough money to buy a house despite the worst economic downturn in modern history. Within seven business days, you should get your participation trophy in the mail.
Truly, purchasing a home signifies a remarkable achievement and ushers in a thrilling new phase of your life. But it’s also possible for it to be perplexing and nerve-wracking. Find out what to anticipate and how to proceed with these helpful hints.
Before anything else, verify your credit score
In fact, before you even think about applying for a mortgage, you should look into your credit score. You need to show the bank that you’re reliable and have a steady income before they’ll give you a mortgage. Your credit score is their primary metric.
A decent mortgage requires a score of 620, with higher scores preferred. A lower interest rate and, by extension, a substantially reduced monthly house payment are both possible outcomes of a high credit score, which indicates your financial soundness.
Establish your budget
Some real estate websites list properties for $1 million or more, but just because you like looking at them doesn’t mean you can afford one. Just because you have excellent credit doesn’t mean you should get pre-approved for a mortgage that’s too expensive. Finding out how much you can afford is entirely up to you.
Your monthly mortgage payment should include not just the principal but also any applicable escrow fees, homeowner’s insurance, and mortgage insurance, so it’s important to plan accordingly. The first step in establishing a reasonable budget is to identify how much money you can spare each month. Keep that top number in mind at all times.
Find out if your loan is pre-approved
Find a reliable mortgage broker and let them help you shop around for the best deal for your needs. There is no universally applicable lending program because every homebuyer has unique requirements and priorities (no mortgage insurance, modest down payment, etc.).
Investigate your choices thoroughly, paying close attention to the details of each offer. You risk getting a terrible bargain if you don’t. Keep in mind that home financing options from banks often exceed reasonable spending limits. “The 2008 recession” should serve as your motto to keep you going strong.
Have you set aside enough money for a down payment?
Take out whatever non-liquid assets you have if your savings, investments, or other sources provide a down payment. You must prove you have the money you claim to have because your mortgage lender will thoroughly search your bank records.
Put your planned spending in one savings account (preferably inaccessible) and withdraw it from all other sources. It is important to have cash accessible when you are ready to close on your new house.
Reduce expenses even more
As a young person who feels undervalued and underpaid, saving up for a down payment is a huge accomplishment, but that’s not all you have to worry about. In order to avoid any unpleasant surprises, set aside some money before you begin house hunting.
You should have some extra cash on hand for things like movers and packing supplies, in addition to the down payment and closing charges. Don’t forget to include the cost of any necessary repairs to your current home and any services you may desire for your new place, such as professional cleaning of the carpets, windows, or foundation.
Get the facts
Now that we’ve taken care of the money for the time being, let the games begin. Your ideal home is almost within reach. However, not all dream homes have the same construction or cost. Do some research to find out where you want to focus your house search.
Interested in being able to stroll downtown? Find out how much houses cost in the city’s vicinity. What about educational districts? See what the local schools’ official grades are. Check out the emerging neighborhoods if you’re a thrifty homebuyer looking for a favorable return on investment.
Compile an Essentials List
You have identified your target zones and have a good idea of the types of homes that would be feasible to purchase within them. At this point, you need to decide what essentials your new home must include. Creating a “must-haves” and “like-to-haves” list is the greatest piece of advice.
If you’re looking for the ideal house but are ready to settle with street parking, a garage would be an item on your “like to have” list. Things like a dishwasher, a fully equipped kitchen, and a fenced-in backyard are on your “must-have” list because they are not negotiable.
Locate a Reliable Landlord
You should wait to contact a real estate agent until you’re completely prepared to avoid wasting their time; after all, brokers don’t earn a commission if all they do is assist their clients with finding homes. So, you’ve decided what you want; the next step is to contact a real estate agent.
Choose a buyer’s agent with caution. Someone who is aware that they are representing you is ideal. Despite any commission, they will be your advocate and help you buy the home of your dreams at a fair price if they are competent.
Have an initial conversation about purchasing
As easy as it sounds, finding a house, making an offer, and moving in isn’t. In order to make a smart investment, you must follow all of the necessary procedures. You didn’t save all this money by working three jobs, only to find yourself in a financial bind.
Ask your real estate agent to walk you through every step of the process. If you’re feeling overwhelmed, have them write out the steps (or save them to an electronic file) so you have a reference for when you need to return them.
Get all the answers you can
Inquire about anything and everything that comes to mind as you go through the purchasing process. So what if your question seems foolish? Just ask. As a long-term investment and one of the biggest purchases you’ll ever make, make sure you understand the processes.
Start things off on the right foot by asking plenty of questions during your first appointment with your realtor. To put yourself at ease and assist the realtor in managing expectations, it’s a good idea to tell them if you’re the type of person who gets nervous easily, needs everything explained thoroughly, and wants answers immediately.
Discover How Much Your Closing Expenses and Inspections Could Cost
Your mortgage broker and you have likely already gone over the down payment amount, but that isn’t everything you’ll need to finalize the purchase. As the closing date approaches, there are a number of costly inspections that the state requires of your home.
In order to provide you with an estimate for the cost of these inspections, your agent can probably recommend vendors they work with. You are not required to choose their preferred vendor, but it’s still advisable to conduct your own research. Some vendors require payment for service, while others include it in closing expenses.
Determine whether you can afford the closing fees and inspections
The truth is that finding out how much more money you’ll need to buy a house might be a tremendous shock. After seeing all the numbers, assess your finances to see if you can proceed.
Do not continue if you fear you won’t have enough money to cover your bills. You should avoid using your down payment money to pay for a mortgage that you cannot afford in the long run.
Get your real estate agent to set up an MLS search
The discouraging financial details are in the background. Now that you know you can afford a new home, it’s time to start exploring your possibilities. Get your real estate agent to set up an MLS search so you can see new listings as soon as they hit the market.
Due to its near-real-time updates, an MLS search outperforms the most popular real estate websites. Zillow listings for houses that are supposedly for sale can really have multiple offers. To access the Multiple Listing Service (MLS), you must be a licensed agent, so they will need to set it up for you.
Schedule a few showings
You can narrow down your search for a new house in the Multiple Listing Service (MLS) by entering your criteria (location, price range, square footage, etc.). Get in touch with your real estate agent as soon as you locate a few that catch your eye so they can arrange a viewing.
Viewing houses fast is a must if you’re in a highly competitive market. If the price is right, you could sell them ina few minutes. To avoid purchasing a house that is a complete mess, exercise patience and wait to offer until you can visit the property in person.
Visit houses with an objective eye, not a passionate one
Remain calm. Even though the house you’re considering has a lovely open layout and a spacious master bedroom, there are other factors to think about besides aesthetics. To determine if the house is solidly built, examine the unsightly components, such as the baseboards, ceilings, and window frames.
Verifying the functionality of various appliances (including the gas fireplace, if that’s an absolute must-have for you), as well as the siding, around water fixtures, and other potential leaks, can tell you a lot about a house.
Make Notation
Particularly if you tour numerous houses in a single day, you are likely to forget some of the details you observe. To help you recall the details of each house, make notes as you go along.
Because you set the search parameters, many of the houses you see will look and feel the same. Taking notes on each aspect will help you choose between two homes with one or two standout features. The details will blend together, though.
Imagine that every home has security cameras installed
Property sellers aren’t always required to disclose security cameras. Nowadays, it’s not uncommon for homes to have outside security cameras and doorbell cameras, some of which can even record audio.
Do not make noise when touring the house or outside afterward; the owners may overhear your conversation and understand your offer. Taking notes during the walkthrough and meeting up with your realtor afterward, away from cameras, to discuss future steps could help you in the bargaining process.
Present a Proposal
The time has come to offer because you are in love with the house, the neighborhood, and the price. Collaborate closely with your real estate agent on this; they may research other homes in the area that are similar to the one the sellers are selling and determine if the asking price is fair.
It is a common mistake to feel like you’re low-balling them with your first offer when the price is too high. If the item is priced low, the sellers may be attempting to instigate a bidding war in order to get the maximum possible price. To help you make the best offer, your real estate agent will be well-versed in all of this information.
Come to an agreement through negotiation
Despite your best efforts, your first offer may not be the last. While you’re at it, consider your house budget. Bear in mind that the bank probably won’t give you a mortgage for more than the house is worth in an appraisal. On the other hand, the vendor might flat-out refuse your offer. Then we will return to the process of looking for a home.
If all goes according to plan, once you and the seller agree on a price, the house will be officially under contract and yours to own. The remaining time until you sign the final paperwork and become the legal owner of the house is usually thirty to sixty days.
Stay away from home appliances and furniture
A contract does not grant you complete freedom of action. Take advantage of this opportunity to settle any outstanding mortgage paperwork, lock in your interest rate, and prepare for closing. We are currently meticulously reviewing your financial situation.
Do not buy any large furniture or appliances at this time, no matter how tempting they may be. You should avoid having a sharp decline in your bank balance or charging excessive amounts on a credit card, since this could have a negative effect on your financial score and debt-to-income ratio.
Purchase a policy for your residence
Always do your own research; however, many real estate brokers can provide suggestions for homeowner’s insurance agents. It would be a mistake to select an auto insurer just on the basis of their multi-policy discount; not all providers provide the same level of protection.
Before closing, you should get homeowner’s insurance, as your mortgage lender will likely insist on it and may have specific coverage requirements. Avoid sacrificing coverage in favor of a cheaper premium by keeping in mind all of the things you own and could potentially need to replace during policy setup, such as clothing, appliances, furniture, etc.
Pay close attention to detail
We put in place the due diligence phase to protect you and your money. Attend each inspection in person and feel free to inquire. Review the inspection report in full upon receipt to ensure that there are no future issues.
Every inspection report will reveal something. There will be typical signs of wear and tear on a previously lived-in property, but brand new construction often has its own unique characteristics. Focus on seeing big warning signs; ignore minor issues that are simple to resolve.
Arrange for additional inspections
It turns out that house inspections aren’t as comprehensive as they first appear. Your inspector did nothing more than check that everything was operational during the inspection, despite the extensive report they provided. When winter rolls along, they have no clue how the air conditioner will work in August.
For a more comprehensive assessment, call in an HVAC expert. To go even further, you can think about getting in touch with electrical and plumbing professionals. Before you start, you should check the condition of everything, that could cost a lot to fix.
Make your concerns known, and be ready to leave if necessary
After you’ve checked for termites and found none, you shouldn’t move forward if you still find any. Be sure to review the reports thoroughly to identify any issues you would need addressed prior to assuming ownership of the property.
You should avoid getting into a money pit at all costs. Before closing, either have the sellers remedy the roof leak, HVAC problem, or plumbing issue, or deduct the cost of repairs from the selling price so you may solve it. You should be ready to back out of the contract completely if they refuse.
Make time for everything
You can perform a small happy dance now that everything is in order, all the problems are fixed, and you feel confident about the house. Then it’s back to business as usual. Get your moving schedule in order now if you haven’t already.
Plan the relocation and get a quote from a moving company. Once you’ve settled into your new place, it’s a beneficial idea to contact the local internet and cable companies to have your services set up as soon as possible.
Your name must be on all utility bills
Your utility bills will include not only your internet bill but also water, garbage, recycling, power, and gas. Congratulations on becoming a homeowner! The sellers currently own all those utility accounts, but they will remove them the day they move out.
Make sure to have everything set up in your name starting on your closing date to avoid a terribly chilly and dark first night in your new house. To gather information unique to your city, you might need to contact many businesses or ask the sellers directly.
Conduct one last walk-through before closing (and resist the urge)
You and your realtor will do one last walkthrough before closing and signing paperwork. At this point, you should verify that all previously repaired items are in fact repaired and that no additional, serious damage has occurred.
Be ready to delay closing if something doesn’t add up. You shouldn’t feel obligated to purchase the property just because the sellers opted not to restore the couch that they crushed through the drywall; after all, it’s your investment. Speak up without fear.
Be prepared to put your name on it
When you were a child, do you remember practicing your signature on paper until it was perfect? Preparing for a house’s closing was something you were unaware of at the time. The excitement starts when you visit the closing attorney’s or title company’s office to finalize the deal.
Your real estate agent, mortgage lender, title company, and closing attorney (if applicable) will all be present at the closing. At least a million pages will bear your signature and initials (or at least, that’s how it seems). After you pay the closing fees, you’ll become a homeowner!
Be patient for a while
Although you are now the proud owner of a home, you may have to wait a little while to acquire the keys if you bought a property that was already occupied. We apologize for any inconvenience this may cause. There is often not much breathing room between selling your house and closing on your new one—it frequently occurs on the same day—unlike in the excellent old days before the recession.
In order to buy themselves some time to relocate, your sellers probably “rented” the house back from you. Since this is your first house, you can extend your own lease and finish packing for the big move.
I love your brand-new house!
You succeeded! Finally, after what seems like an eternity of saving up and enduring the home-buying process, you can call yourself a millennial homeowner. Celebrate your success and revel in the fact that you accomplished what many your age consider impossible.
The truth of homeownership (and maintenance) will eventually hit you. You should educate yourself on the fundamentals of house maintenance as well as the many factors that contribute to increasing your home’s value. For the time being, though, open the cork, kick back, and enjoy the luxury of your own home.
