How Much Home Can You Afford? A Buying Guide for Millennials
Millennials Can Seal the Deal, Too. Here’s How.
For millennials who are getting ready to put a down payment on a new house, avocado toast isn’t the only expense to consider. For many millennials, buying a home is an unattractive investment in the aftermath of the recession that occurred in the mid 2000s. Because of this, many millennials are more likely to invest in education than in property. The Atlantic claims that “the share of 18-34 year olds who who own a home has fallen to a 30 year low.”
However, 2017 showed a small change of heart for millennials within the housing market. With more resources and advice now being presented to millennials on the market for a house, more young people are looking seriously into investing in property. Let this article serve as a guide for all you millennials who are ready to take the next step toward homeownership.
When Buying a Home, Consider the Whole Cost
It’s important to be extremely realistic when it comes to buying a house. Consider all of the expenses associated not only with buying a house, but also with owning a house. Are you prepared for the unexpected expenses that inevitably pop up when you own a house? Be sure not to overlook things like property tax, insurance, and closing costs.
With that being said, homes do tend to appreciate in value over time. If you can afford a down payment now, then purchasing a home is still likely to be a good investment. Most standard mortgages require a 20% down payment, so use that as a guide for creating a plan for saving.
Start Planning Ahead of Time
You may want to consider getting pre-qualified or even pre-approved for a loan before you start looking at houses. Getting pre-approved will help you understand how much your lender is willing to give you, and will also help speed up the underwriting process when you are ready to commit to a loan. Note that pre-approval and pre-qualification are not loan commitments. Bankrate has more information on pre-approval loans and qualifications.
It’s also smart to do some research on current mortgage rates. As the economy is improving, rates are climbing. Many experts are suggesting that sooner is better when it comes to buying a home in this economy. For more specific facts and figures, check out this article from Housing Wire.
Reduce Unnecessary Expenses
While the suggestion of eliminating avocado toast in order to finance a home is not popular (find out out how many avocado toasts you would actually need to give up in order to put a down payment on a house), it’s always smart to reduce expenses and to monitor spending when you’re saving up for anything.
For example, if you have a car and live in a city with good public transportation, consider selling it. This article from Nerdwallet cites that the average car can cost an owner up to $8,500 dollars a year. Create a plan for saving that specifically outlines your daily expenses. Consider using an app like Mint to help you keep track of your spending habits.
Learn to Speak the Language, and Be Ready to Negotiate
Practice your poker face—negotiating is an extremely important part of the home-buying process. Experts say that negotiating price may not be as fruitful as it once was — check out this article from Time Money for the proof.
However, there are other things you can use to negotiate for a better deal. If you can agree to close quickly, a seller may be more likely to agree to a lower price. Be in close communication with your real estate broker and other advisors.
Don’t Be Afraid to Pull the Trigger
When it’s time to close the deal, don’t hesitate. Buying a home as a young person is difficult, but not impossible. As long as you plan and save strategically, your dream of owning a house is within reach. Get ready to enjoy that avocado toast from the comfort of your own home.