Millennial Homebuyer Mistakes to Avoid
As millennials grow older, graduate college, and have kids, they’re expected to flood the real estate market. In fact, Harvard University’s Joint Center for Housing Studies found an increased homeownership rate due to young buyers.
Buying a house is no small feat, and there are a lot of mistakes to be made with such a big financial commitment. Indeed, a poll from Bankrate reports that 64% of millennials had regrets when it came to purchasing their home. To stay ahead and avoid disappointments of your own, we’ve made a list of common home-buying mistakes that millennials need to avoid.
Not shopping for mortgages
Our article on ‘5 Mortgage Tips for Millennial Homebuyers’ emphasizes the importance of getting a pre-approval letter from a trustworthy lender before even looking for a home. Not only is it a great first step, but it also gives you an appropriate price range to work with. However, some millennials mistakenly think that they have to get the mortgage from the lender who gave them their pre-approval letter, which is not necessary. The reality is that you can shop around and take your time to look for different interest rates and terms that are best for you. Failing to do this may cost you thousands of dollars’ worth of interest.
Failure to get professional help
One common mistake millennials make is looking through online listings like they look through their favorite online shop— they choose what they like, check it out, and proceed to close the sale. But the housing market is composed of two sides: the listers and buyers. Buying agents are legally bound to support your interests while listing agents are bound to help the sellers maximize their price return. Buying agents also open your eyes to the hidden fees on top of your mortgage: from property taxes, closing costs, to insurance. Paying for them is where mortgage brokers come in.
Some clients with financial advisors may feel that they’re sufficient enough—but there’s a difference. Mortgage brokers specialize in the real estate industry—they’re able to advise you on the best loans, and might even lower your mortgage. Conversely, Maryville University points out that financial advisors are equipped to assist you in a wider variety of concerns— from banking and insurance to portfolio management and investments. Although they specialize in different aspects of finance, having both professionals by your side is beneficial. For instance, while a broker can help you refinance your loans, it’s your financial advisor who will assess your options for you.
Read: A short guide on how to prepare a home for a new baby.
At the end of the day, hiring the right professionals may be costly, but they’re only there for your best interests. Both agents and brokers will be able to walk you through exactly what you need to know, and why you need to know it— saving you from ever regretting your home purchase.
Not saving enough money
Some millennials jump the gun when they look at the mortgage and down payments next to their savings. Although they may have enough for both, it’s essential to realize that these are not the only things you have to save for. Other expenses to consider include home repairs, improvements, and maintenance. Familiarize yourself with everything you need to set money aside for the future.
Choosing the wrong neighborhood
Let’s say you’ve found your dream home. It’s perfect— you’ve got your dream kitchen, a spacious living room, and just the right amount of bathrooms for you and your family. However, the neighborhood is far from your workplace, or the nearest grocery is 30 minutes away, or the area, in general, is just sketchy. Don’t compromise the area for the house— there are better houses out there. A survey by Trulig/Harris Interactive reported that 84% of respondents prefer the right neighborhood over the right home. Living in a quiet neighborhood may be great, but if the commute is long and far, then it may not be worth it. Being surrounded by shops may be convenient, but you might soon get irked by the constant presence of noise. Put your current life in perspective before making any decisions.
Once you’ve chosen the right house and neighborhood for you, and have approval from the right professionals, you’ll finally be able to enjoy the path to homeownership. Not only will you be more financially secure with your decision, but you’ll be more confident with your purchase as well.
Don't forget to also check out our article that discusses the financial preferences of millennials.
This article is a contributed article written by Reese Jones. Reese is an Arizona-based homebody who delights in reading thriller novels and relaxing with her two dogs, Riley and Andie. She’s currently a home-based social media marketing consultant and a part-time gardener with an affinity for the simple Desert Marigolds.