8 Things to consider when buying your first home
As a millennial (quite the way to start a blog), I have long dreamed of the day I finally get to own my own house. Well, I’m 30 now and purchasing my first home—YAY. But, not without many thoughts, concerns, fears, intense conversations… the list goes on.
You hear about it all the time: millennials are not able to afford a home because of debt, baby boomers, job retention, being a lazy entitled generation…
But some of us are more ready than others and some of us aren't lazy. That’s not to say that it wasn't very difficult to finally feel ‘ready’ to purchase a home.
Here are 8 things to consider when buying your first home (if you’re reading this now, you’re probably a millennial like me, so listen up):
1. How much can you afford?
That’s easy, just use one of those fancy calculators and poof! WRONG. If only it were that easy..
I just checked one of those calculators again, and it said I can afford $113k. Well then, I’d better give up now if I still want to live in Southern California.
better right way to find out how much you can afford is by talking with a lender and getting pre-approved. Now, I’m not going to sit here and lie to you, that involves A LOT of documentation and paperwork, but it’s truly the only way to find out how much you can afford. So stop dreaming and get off of Redfin or Zillow and actually find out what you can afford to buy. I would only recommend this if you feel you are actually in a spot to purchase a house in the near future. Otherwise, keep on Zillowing because that’s always fun.
2. Think long and hard about where you want to live
“Location, location, location” is what my mom told me—and she was right. Your financial status and budget can have a huge impact on where you can purchase, but it’s beneficial to already have an idea where you want to be.
Think about why you’re choosing your location. When we were going through this process, we considered our commute to work because we drive in incredibly inconvenient traffic to and from work everyday. Yes, our grandparents walked 5 miles in the snow just to get to school… well, global warming and low wages are my answer to that grandpa!
In all seriousness, your ideal location determines more than just how much home you can afford; it also controls how much your bills might be and other cost of living expenses down the road.
In addition to location, you also might want to look into surrounding school districts if you are considering or are raising a family. On that note, safety is also important! Know where local authorities reside and what type of crime happens in your desired area.
3. How much TLC does your future home need?
If you’re like me and many other millennials, your first home will probably not be a move in ready mansion in Beverly Hills. More likely you’ll find a fixer upper and want Chip and Jojo to renovate your house. Well, they’re in Texas and super busy—trust me, I asked! So, that means you gotta fix up your place. And yes...I LOVE that show.
I’ll give you an example of what I mean by TLC: we viewed a ton of houses each one needing fixing up in one way or another. From plumbing, to roofing, to termite damage, to wood rot, to landscaping, to HVAC repairs, to drywall damage, to exterior cracking—the list goes on. Something needed to be fixed in each house and some things are easier fixes than others. It’s important to have a thorough inspection of the house's current condition so you don’t get a lemon. Well, not a lemon, but a BAD house! Have a list of deal breakers and things you are willing to take on yourself.
4. Check what the house comes with
Solar Panels? Probably not, but maybe.
Find out what comes with the house because worn-out fixtures eventually need replacing. For example, your windows and insulation. Single pane windows don’t insulate much and can break more easily than double pane, but you can add solar film to help with the insulation and fading problems. Security film keep your windows intact during an earthquake or break-in attempt. In fact, adding security film will make your single pane window stronger than a double pane window.
Oh, come on! You knew I was going to mention our services again. I have to!
Plumbing is also very important. Old plumbing can be a huge headache down the road because one bad pipe break can cause thousands of dollars in water damage.
Check with your realtor and to find out when things were last replaced, fixed, or added to the house. Best case scenario, features were recently updated so you don’t have to worry about that until you are 5-10 years into your home ownership. Also, if you can’t afford a single family residence, you will most likely have HOAs. Know what exactly those HOAs will cover and where your money is going. HOAs tend to get a bad rap but sometimes they can save you potentially a lot of money that might otherwise come out of your pocket if you purchase a SFR.
5. Is it the right time to buy?
The answer is, there is no answer. The market’s performance is a huge, legitimate concern, and something that is out of your control. However, lenders are doing their part to make sure you are able to afford a home and not handing out loans like candy—which is what they did back in the early 2000s, which caused the 2007 great recession. Thanks baby boomers… (Mom...Dad...)
If you have a stable job, you know how much you can afford, you’ve done your research on the right location for you and your family, and found out how much TLC the house might need, is there anything else to consider?
Trick question! There’s more, but that doesn’t mean it’s not the right time to purchase. If you’ve found the ‘right’ house for you, then go for it. Purchasing sooner rather than later could also help you build more equity on the house rather than waiting and the price of the house rising. There are so many things to consider, so talk with your spouse, partner, or think long and hard with yourself if you feel it’s the right time to buy, and if it is, go for it.
On the flip side, if you don’t want to take the leap now, then wait another year and tell me how that works out for you.
Seriously, tell me in the comments below.
6. Can you still save for your future?
Well after all that, can you still afford to live in the future? Thinking about our retirement as a millennial is terrifying. Did you start early enough, are you putting 15% of your paycheck towards retirement, are you getting a yearly raise, do you invest your money, if you’re 1099 are you saving 40% for taxes and still putting away for retirement? AHHH, right?
After you find out how much you CAN afford from your lender, you should really consider finding a home that’s priced where you are not spending your whole paycheck every month towards your mortgage. Rather, find a house that is a less than your max budget and live more comfortably. This is a lot easier said than done, but if you spend the time looking, you will find the right house to fit your needs.
7. This is probably not your ‘forever’ home.
Chances are, you will probably be purchasing a starter home, or if you play your cards right, your future investment property; but it’s most likely not your forever home. So keep that in mind because you will tour a lot of homes with your realtor and you'll most likely find something in each house that is less than ideal or isn't what you envisioned you would purchase. And, that's okay.
You should go into it thinking this house will get you in the market and allow you to start building equity and you can build that equity for the next 5-15 (20-30, possibly) years, which will allow you to purchase your ‘forever’ home—at least that’s what my parents have been telling me.
The truth is, we have no idea what will play out in the future. If you are thinking your starter home is going to be your forever home, take into consideration things like the economy, your job(s), your income, if you have children, if someone gets ill etc. Things can change quickly!
8. Work, work, work…
So we just covered a lot of things to consider when purchasing your first home but the last thing to consider is your work. As a millennial, we get labeled as lazy, entitled, require instant gratification, need transparency, being mustache man-bun food eating emotional cry-babies… Sorry. I am not the mustache man-bun… you get the point.
Some of the labels are correct but some are way off. We are multitasking, tech-savvy, problem-solving, diverse, collaborating and connecting, flexible, work-life balanced, entrepreneurial, career driven individuals. And that’s a good thing!
But the point I am trying to make, is that we’ve had it hard getting into the housing market. We can keep complaining about how hard it is or we can work extra hard to make sure we have the financial stability we are all striving for, the income to pay off student debt, the work places that push innovation and real problem-solving, and the future we want our children to live in—one where they can be more successful than us. If we do that, our successes as a generation will trickle down in the next generation and they can have a better opportunity to purchase a home.
Please feel free to leave a comment below and let me know what your experiences have been!
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