Buying a home is a daunting task for anyone, especially first-time buyers. As the oldest millennials reach their 30s, they are encountering new and old house hunting issues. Our five real estate tips teach millennial home buyers how to approach the hunt.
In searching for a home today, millennial home buyers face a competitive market. They soon realize that buying a home takes time, effort, patience and determination. But, first time buyers who take simple steps, such as studying the neighborhood or relying on the assistance of professionals, will be more likely to close on their dream property.
Advice for Millennial Home Buyers
1) Check Your Finances
Owning a home is a great investment, but it comes with many upfront costs. Before you start your search, take a second to examine your own financial situation. Start by checking your credit score, credit card debt and student debt.
Next, millennial home buyers have to assess if they can cover a typical 20 percent down payment, either on their own or with bank assistance. A good guideline for if you can afford a particular home is the 28/36 rule. This means that your mortgage payment, property taxes and insurance should be more than 28 percent of your monthly gross income. The rest of your debt (student loans, credit card debt) should not exceed 36 percent. Anything above 28/36 would put you in a financial hardship.
In judging affordability, new home buyers should also factor in the expenses related to taxes, property insurance and closing costs. In addition, assess whether you think you can cover the costs going forward.
2) Assess Your Life Situation
Not all millennials who can buy a home should buy a home. Life situation should be considered. How long will you stay in a home? If it’s less than five years, you might be better off renting. Employment situation is another factor that should be considered. Are you currently looking for a new job? Is your company considering moving to a different city?
3) Study, Study, Study
Finding the perfect home starts with homework. Millennials, who grew up on the Internet, have an advantage over other generations. Millennial home buyers should begin by researching neighborhoods, like those in Nassau County and Suffolk County on Long Island. While different factors appeal to different people, strength of a school district and real estate taxes are two of the most talked about aspects of a community.
4) Rely on the Professionals
Even though you can search for real estate on the Internet today, home buyers benefit from a real estate agent's knowledge and expertise. From the open house to the closing, real estate agents provide assistance in all aspect of a housing deal.
5) Ask for Advice
Like any big decision, it pays to ask for advice. Millennial home buyers have the benefit of parents who may have gone through similar decisions before. Even though times have changed, give your parents a call and ask them what they think before you sign the papers.
