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Adulting: A Guide for Millennials Buying Their First House



Buying first house

Do you ever feel like 12 years of school and 4 years of college prepared you for almost nothing (or at least nothing practical)?

Prepare to have a ton of useful information dumped on you, my friend.

This is the first of many adulting guides that will help you become ready for adulthood. There are six components to this home-buying guide:

Disclaimer: This article is based on my personal experience as well as information from parents, realtors, and friends. It is possible that it is not entirely correct, so please ask questions and double-check with your realtor and lender. I make every effort to provide you with as much useful information as possible. Please read and use the following information at your own risk and judgment.

Should You Invest a House?

When most millennials consider buying first house, this is the first and most serious obstacle they face. Is it really worth it?

To find out whether it’s worth it to buy a house, evaluate how much money you’d be wasting per month if you are renting.

Home Cost Breakdown

(Based on a $200,000 home with a 5% down payment, which is likely to be the most you can afford as a first-time buyer.)

Principles and Interest 

(At a 3.5 percent interest rate): $831 a month at first, but this will decrease as you pay down the principal on the loan.

Home Insurance (monthly): 

$50, (you most likely have to pay a renter’s insurance anyway, so let’s cancels each other out but I’ve included it in the total.)

Mortgage Insurance (monthly/optional): $90

Property Taxes (monthly): $250 (This will vary depends on the location, size of the property, and age of the house)

Total Wasted Money: $640

Total Monthly Cost: $1221

These values will vary depending on the type of loan you get and the amount of down payment. The ‘waste’ on a monthly basis would be around $640. You’ll be able to take advantage of tax deductions to earn your property tax back.

With these numbers alone, you can see that buying first house saves me money over renting, despite the fact that I would be paying more per month. And the longer I live in a home, the lower my costs get. That is why most people advise avoiding buying first house unless you are certain you will be staying in the place for at least five years.

So, if you intend to stay put, buy a house. However, don’t feel pressured to buy a house if the disadvantages outweigh the advantages. We chose to buy a house and stay put because: 

  • We were close to my husband’s family, which would be ideal when we start having children. 
  • I enjoy my profession.
  • We desperately wanted a Bernese Mountain dog, which most renters would not allow.

What kind of home should you purchase?

Make a list of Must-Haves that you want in a house as you gain a better understanding of what houses look like and what is realistic. This is also a good time to consider which sort of property is ideal for you: a townhome, a condo, or a single-family home. Because they are much less expensive than single-family homes, townhomes and condos are ideal first-time homes.

At the very least, keep an open mind when it comes to purchasing any of these possibilities and go see a property in each category; you never know what will capture your eye.

Last but not least, I’d want to discuss the home’s resale worth. Yes, when purchasing, you must consider selling.

The best resale value is usually found with three-bedroom or two-bathroom houses. You’ll want to make sure the house is in a good neighborhood without any annoying neighbors. You can always renovate within your property borders, but you can’t change the houses surrounding you. When buying a property, schools are also an important consideration so that if you sell it many will buy your house.

What should you look for in a good realtor?

Finding a reliable realtor who can guide you through the process and is familiar with the area is essential for first-time home buyers.

A good realtor will:

  • Check to see if the homes you’re interested in are within your budget. They’ll look at your income, subtract your regular monthly expenses, and check if you have enough money to cover your monthly mortgage payment (principal, interest, taxes, and insurance=PITI). PITI should not account for more than 25% of your total revenue.
  • Have your opinion on a few properties on the market so that they can get a solid idea of what you’re looking for in a home.
  • Suggest you a house IMMEDIATELY as they get on the market
  • Show you houses that you’re interested in and provide comments on any red flags or hidden costs.
  • They should help you through the paperwork and what has to be done before the house becomes yours after you find your future home.
  • They will give you advice on what they think is the best offer for the house and will make the offer to the seller.

How much does it cost to buy a house?

You should get pre-qualified for a mortgage loan before you start looking for a home. Banks will automatically approve you for far more money than you actually need. We were accepted for $270,000, but after doing our own calculations, we discovered that we could only afford $200,000.

A pre-qualification letter stating that you can afford a home within a specified price range is often required before a realtor would take you to see it.

Keep in mind that this is your first home, and you’re buying it to develop equity so you can buy a bigger one later. As my realtor put it, the bank may say you can afford steak, but your spending habits indicate you can only afford chicken. Don’t be tempted by steak; instead, concentrate on chicken.

Don’t forget to include in closing fees when figuring out how much of a down payment you can afford. Remember that these are assumptions. Your figures will vary depending on when you’re buying first house, how much it costs, and where it’s located.

What should you look for in a house?

Hopefully, your realtor understands what makes a good home. Take a quick look at a house when you first go to see it to make sure it matches the bones of the house you want. It’s pointless to spend time inspecting a home if you already know it’s not your ideal. Check out websites like Home Guidelines or Ohana Home Improvement to have ideal home designs ideas.

On the other hand, take a look around your neighborhood and the surrounding area: Is it clean, or do you have some scumbags as neighbors? In addition, walk through the house, making sure it has all of your Must-Haves and noting any major work renovation that has to be done to make it livable.

Once you’ve found a home you like, ask your agent to schedule another tour. Yes, do it twice. On the first showing, you’ll miss stuff and your judgment will be clouded by excitement.

You found a house, now what?

Congratulations! You’ve found the house you’ll buy…hopefully! Between now and the deadline, a lot can happen (when you sign the contract and the seller hand over the keys). So, keep your expectations in check.


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