29 Dec 2020

5 Things Millennial First Home Buyers Should Know

Millennials have dominated the housing market over the past few years. Now that they’re becoming more financially secure and thinking about starting families, they’re giving up their rentals and looking for more permanent housing. If you’ve found a house you like and you’re ready to be a homeowner, check out these home buying tips for millennials to start the journey.

1. Place an Offer

When you find a house you like that fits within your budget, you can work with your agent to place an offer. If you live in a competitive urban area, like Philadelphia or New York City, you’re going up against people with aggressive offers, some more than asking price. Follow these steps for placing a fair offer while standing out:

  • Get pre-approved for a mortgage: The pre-approval letter gives you leverage above other buyers because it shows a bank’s confidence in your ability to afford the house. Start with your bank or credit card company to begin the application process quickly.
  • Go with your best offer: Your real estate agent should help you determine your best offer based on the value of the houses in your area and what work you’ll need to do on the house. Create an offer letter with the amount of money you plan on putting down — your down payment — and how much you’re willing to pay for the house.
  • Be reasonable when you offer lower than asking: In a competitive market, most people offer the asking price, but you should also be honest about what you’re willing to pay. If you’re going to offer much lower than the asking price, consider moving on to another house, because offering too low could be an insult to the seller.
  • Make it personal: Writing an offer letter is a personal touch you could include with your bid. Send a note to the seller explaining why you want this house and how it’ll benefit you and your family for years to come. Since sellers are often sentimental about their homes, they may appreciate you speaking so highly of their home and consider your offer over others.

2. Negotiate Wisely

After you place your offer, the seller might provide a counter-offer to try to make a little extra money. When negotiating, you shouldn’t be stingy, but you shouldn’t settle, either. Here are some tips for keeping a level head during the negotiation process:

  • Trust your gut: In a competitive market, you may want to settle on the first house you see in your budget, especially after receiving multiple rejected offers. When shopping for your first home, don’t buy one only because you can afford it and someone is willing to sell it to you. While it won’t be perfect, your first house should also be in an acceptable condition.
  • Count the cost of going over your budget: If you put an offer on the house that’s at the top of your budget, and they counter at a higher price, think about if it’s worth the cost to accept their offer. You may love it, but if you can find a more affordable one, pull your offer and keep searching.
  • Consider asking for extras: While it’s not that common in a competitive market, you may be able to ask for other items in your offer. If they have a piece of furniture or a light fixture you enjoy, ask your real estate agent to put that in the contract.
  • Make the offer official: After they’ve verbally accepted your offer, you and the seller will both sign a contract. This agreement outlines the condition of the house and what the seller agrees to in exchange for your money.

3. Get Your Home Inspected

Before you move into the house, you’ll have several opportunities to look through it. Here are some of the times you’ll visit the house during the buying process:

  • Home inspection: While you might want to forego the inspection to save money, this step can actually save you money. Hire a professional inspector to walk through your house to see if there are any costly issues you didn’t notice, like a leak in the downstairs bathroom or termite damage in the basement. Schedule an inspection before you sign the contract, so you can negotiate a better price or get them to pay for other renovations.
  • Home appraisal: After you apply for a mortgage, the lender will send a representative to make sure your property is worth their money. Since the lender is giving their money to help you pay for this house, they won’t want to invest in it if there are significant problems with it.
  • Final walkthrough: Before you close on the home, you should walk through it one last time to make sure it’s in the condition it was in when you signed the contract. If the sellers moved out of the house, they might have caused damage that could affect the agreement.

4. Budget for Closing Costs and Monthly Mortgage Payments

Once you’ve placed an offer and enter the contract, you have some time to budget for the additional costs that come with buying a house. Your mortgage lender and real estate agent can tell you what you can expect to pay, such as:

  • Mortgage payments: Even if you get a pre-approval letter from one company, you can still shop around for better deals with other banks, credit card companies or mortgage lenders. When you get a price quote from them, it includes the mortgage payment, along with interest, taxes and private mortgage insurance (PMI).
  • Homeowners insurance: Ask for a price quote for homeowners insurance from your auto or renter’s insurance company, since they might offer you a bundle deal to save you money.
  • Closing costs: Pay this one-time fee to the lender when you sign the papers needed to make the home your own.
  • Moving expenses: If you’re hiring a moving company, you should have money saved for this one-time payment.
  • Furniture: Whether you’re bringing furniture from your old home or getting brand-new items, be realistic about how much you’re willing to spend to fill your new property with furniture and other decorations.
  • Emergency fund: After you move into your home, you’ll need money on reserve for surprise repairs down the road.

5. Be Patient and Have Fun

Even though buying a home as a millennial is competitive and expensive, it’s also an exciting step into adulthood. When you run into obstacles on your home-buying journey, remember to be patient and enjoy the process. Then, when you finally close on the house, you can truly appreciate this significant achievement.

Make Philadelphia Your Home With Streamline Philly

Philadelphia is a historic yet bustling place to buy your first home. With Streamline, you can take a virtual tour of a new construction home to customize your first property. If you’re interested in taking the first step to homeownership, please contact us online or call us at 267-652-1443.