The Millennial’s Quick Guide to Buying a House

Sara is back! This time she’s giving tips for buying a house.

-Amy


So you’ve read our last Millennial Moment Blog and have decided to buy a house – now what? HGTV will have us believe that buying a house is as easy as looking at three properties, ticking off a couple of pros and cons, and moving in a few weeks later. If only it were that simple, I’d have nothing to offer you here. However, just a few key steps can set you up to make the process as painless as possible.

Money Talks

If you’ve decided to buy a house, you’ve likely already figured out what you can afford for the monthly expenses associated with homeownership and for your down payment. If not, now’s the time to do it. The next step for the money side of home buying is to get pre-qualified and pre-approved. Pick a couple of lenders to work with to get the best terms for your mortgage (e.g., interest rate). Ask your friends and family who they recommend, or if you know folks in the real estate community, they’ll be able to refer you to lenders that have a history of being easy to work with.

The pre-qualification process generally involves providing some basic information to a lender, after which they tell you about different mortgage options and an estimate of how much they’ll lend to you. The pre-approval process will get you another step closer to homeownership. During pre-approval, you’ll give the lender certain financial documents, such as tax returns, bank statements, loan statements, and paycheck stubs. They’ll also pull your credit history from one or more of the credit reporting bureaus. (Learn more about how to get your credit in top condition here). The lender will, in turn, give you a conditional commitment in writing of the exact loan amount they’ll give you.

Once you have specific loan terms, such as interest rate (and whether the rate is fixed or variable), repayment period, initial fees, and loan amount, from a couple of different lenders, you can pick the lender with the most favorable terms for your situation. The interest over the life of the loan can be dramatically different depending on the repayment period, so look at the total interest you’ll be paying over the life of your loan, not just the rate. You’ll also want to factor in how the terms affect your monthly payment amount so you can stay within budget.

Location, Location, Location

We’ve all heard that the key to real estate is location, location, location, but it’s also square footage, lot size, upgrades, etc., that make a house desirable. Before you start looking at houses, it’s a good idea to have a list of the most important features. This information will give your realtor a place to start suggesting homes for you to see in person. Once you’ve seen a few, you’ll be better equipped to either narrow down or expand your list of must-haves and deal-breakers. Remember, though, that all of these attributes affect the price of a property, so be prepared for some sticker shock if your must-haves involve a prime location, large lot size, and a gourmet kitchen.

Teamwork

With such a big purchase in the works, rest assured that you won’t be going it alone. One of the most important keys to making the home buying process a painless one is to have the right professionals on your team. After finding the right lender,  your next key ally in the process will be a good realtor. The best place to start searching for a great realtor is with your friends, family, and co-workers. Ask the people you trust who they’ve worked with and if they’d use them again. A good realtor will work with you to get the most items on your must-have list as possible without breaking the bank. If your realtor is pressuring you to look at houses far outside of your price range, you may want to reconsider the relationship, as they might not have your best interests in mind. When you choose a good realtor, they’ll also help you get the most favorable terms for a contract, such as closing costs paid by the seller. Most importantly, your realtor will help educate you on all the home buying process steps and serve as your advocate.

While you’re probably not an expert on the process yet, hopefully, you now feel a little more prepared to conquer the home buying process. By getting more educated on the process, you’re already one step closer to successful homeownership.

Happy house hunting,

Sara Blackmore

The views and opinions expressed within this blog are those of the author(s)’ and do not necessarily represent the views and opinions of ATKG, LLP, its owners, employees, or affiliates.

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