Millennials are so amazing. We are a generation focused on uplifting others, entrepreneurship, and defining success on our own terms. One trend among my peers is homeownership at a “young” age. And I definitely got the homebuying bug early on. During my last semester of grad school, while my classmates and I were negotiating job offers and scouting places to live in new locales, I realized a few things:
- I would rather buy than rent.
- I don’t know where in Houston I want to live yet.
- Moving back home will fast-track my savings goals.
That last one was a little hard to swallow, I’m can’t lie! Yet, it has been one of the best decisions. Living at home as an adult is not at all the mark of shame it was in prior generations. Among millennials, it’s often viewed as a smart financial move. I am very thankful to my parents. I can’t tell you how many people told me they were envious of the fact that I could live at home and that they’d do it in a heartbeat if they could. Plus, I was able to help my family with all kinds of things and spend more time with my two sisters, who are currently in high school (freshman) and college (sophomore). I spent a little less than two years saving and about three months seriously searching before I found a home with the features I wanted, in my desired area and price range. Below are the tips I found helpful in the process. If you want to buy a home in the near future, keep reading!
Define your timeline. When do you want to purchase? Factors that will impact this include whether you currently have a lease and when it will expire, if you have a big event on the horizon such as a wedding or the birth of a child. One piece of advice I’ll share is not to be a slave to your timeline. Don’t make a decision due to pressure. If you don’t find a home you love before your lease is up, you can always seek a shorter term option or look for someone to sublease if needed. My timeline was relatively arbitrary since I didn’t have events dictating my housing situation, just the drive and desire to own a home of my own.
Analyze your financial situation. How much do you need to save between now and the time you want to buy? If that isn’t workable, go back to step one and adjust. *Assessing your credit-worthiness is part of this equation as well because if you have areas for improvement, you may need more time to work on them. After I set my timeline, I determined how much I would need to save each month to meet a goal for down payment, closing cost, furnishings and moving expenses, and had the appropriate amount automatically diverted from each paycheck into a savings account. Discover Bank online has one of the best interest rates I have found so that’s where I kept my housing coins. While I saved, I monitored my credit reports and scores using apps like Credit Karma and free monthly FICO scores provided by my credit card company. I also checked my free credit report at three different times each year.
While you’re Waiting… The time after you’ve decided to buy but before you engage a realtor can be very productive! Use this time to explore and narrow down the areas you like best. Assess and research your home furnishing needs. Determine the style and size home you’ll need. Following are some questions to ask and answer during this in-between time:
- What style of home do I want/need?
- Am I willing to commute?
- In what part of town do I spend [or want to spend] most of my time?
- How big is the gap between the home furnishings I own now and those I’ll need?
Answering these questions helped pass the time and maintain my excitement level while saving and searching. During this time, I realized that my church, job, and frequent social haunts were all in the city, which helped answer a lot of the questions. Another helpful thing to do during this time is prioritize your wants and needs in a home. This may change after you start physically looking but it’s good to have a starting point. I quickly decided I preferred a one-story home and needed an attached garage. Of course, the kitchen had to be large enough for me to make magic in. Apps and sites I found helpful during this time are Zillow, HAR, and Pinterest. Also, the articles below were very helpful in getting me up to speed on house-hunting lingo and different things to expect.
Assemble Your Team. Once you achieve or get near your savings goals, it’s time to get pre-approved and select a realtor. For a realtor, I met with a couple before going under contract with someone who I felt demonstrated know-how and genuine concern for my goals. I think it’s best to choose a realtor based off solid personal recommendations. Both realtors I met with came recommended by a family member and knew the my desired area like the back of their hands. If that is not possible or doesn’t work out, do some online searching to find realtors experienced in the area where you want to live, read their reviews across multiple sites, then set up meetings to feel them out. A good realtor can also provide you a list of reputable lending institutions for your pre-approval. That is how I found my loan officer. You will communicate with these two people a lot. I’m talking multiple times a day via phone calls, emails, and text messages when it comes time to making and negotiating an offer! For this reason, you want to make sure to choose professionals who are good communicators and demonstrate a certain level of follow through. Don’t be afraid to look around on your own but, in most cases, official communication should go through your representatives (realtor, loan officer, and attorney, if applicable). My uncle (who’s also my contractor) actually found the house I ended up buying and my realtor set up a showing with the listing agent.
Don’t Get Caught Up. Emotions can run high when house hunting. It’s easy to fall in love with a home’s features but affordability is another matter altogether. If you’re working with a professional and thorough realtor, he or she won’t show you homes that are outside your price range unless they believe there is ample room for negotiation (Unless you’re on Property Brothers and they’re trying to give you a reality check!). They should also be realistic with you about affordability in your desired area. With that said, it’s up to you to stick to your budget. I set a price range and clung to the bottom of it when starting my search. (Imagine the Dave Chapelle meme where he’s clutching his money to his chest.) This gave me some “room to grow” and once I honed in on my dream area, I realized that I’d need it! Location was the biggest factor for me and since I chose an area that is very hot in terms of real estate and development activity, prices were jumping. I had to move closer to the top of my range but was still able to find something affordable for me.
Stay Ready so You Don’t Have to Get Ready! Buying a home takes a lot of paperwork. Before you even get the opportunity to catch a hand cramp from signing a zillion documents at closing, you’ll be asked for a hefty number of documents regarding your assets, debts, living situation, employment, and more. Make sure to keep track of important documents in order to avoid unnecessary delays or derailment of your process. If you have questions about anything that’s being asked of you, reach out to your loan officer and realtor to explain. For example, my loan officer requested a certain retirement account document. For whatever reason, the company that manages my retirement accounts was unable to produce it. Once I understood what information was needed from the document, I was able to communicate this to the benefits department at my job and come up with an available document that contains the same information.
Buying a home takes a lot of paperwork, calls, cash, and research. It can seem overwhelming but is totally possible–if I can do it, you definitely can! My process went pretty smoothly so I hope these tips are helpful to you. Thanks for reading!