Millennials are a unique generation that has already had a significant impact on the housing market. As the new young professionals, they are entering the housing market in droves, often as first-time homebuyers. While this is an exciting time, it also presents them with the opportunity to make mistakes in the home-purchasing process. In this article, we will discuss the top seven mistakes that millennials make when they purchase a new home.
Mistake #1: Not getting pre-approved
One of the most significant mistakes that millennials make is not getting pre-approved for a mortgage. Buying a home should never start with searching for listings online. Instead, it is essential to meet with a lender to determine how much money you are potentially qualified for. With a pre-approval letter, you will know your price range, which will make the home search process more comfortable and will show realtors and sellers that you are serious about buying.
Mistake #2: Not hiring a realtor
Many millennials believe that they can purchase a home through an online listing service without the help of a realtor. While looking online is a great way to be prepared to look for homes in your price range, it does not give you the full picture or price. A real estate agent can guide you through the home-buying process while making sure you stay within your budget and avoid overpaying for a home.
Mistake #3: Buying more house than you can afford
When looking at homes online, millennials often make the mistake of thinking that they can afford the estimated mortgage payment. However, many mortgage costs do not account for insurance, taxes, HOA fees, personal mortgage insurance, or other utilities and maintenance costs. It is essential to consider all the costs associated with homeownership, including insurance, taxes, closing costs, and maintenance, to make sure you can afford the home you want to buy.
Mistake #4: Not shopping for a mortgage
Many first-time homebuyers assume that they have to go with the lender that provided their pre-approval letter. However, it is essential to shop around for the best interest rates and terms that fit your budget. Not shopping for a mortgage can end up costing you tens of thousands of dollars in interest over the life of your loan.
Mistake #5: Not attending a home inspection
Attending a home inspection is one of the most critical steps in the home-buying process. It is essential to walk through the home with an inspector to identify any potential problems or issues that need to be fixed before closing. If you do not attend the home inspection, you may miss out on an opportunity to negotiate the price or have the seller make necessary repairs before closing.
Mistake #6: Not getting a home warranty
Even if a home inspection goes well, there may still be unexpected repairs that need to be made after you move in. Having a home warranty can provide significant savings when something fails from normal wear and tear. Some warranties even cover lack of maintenance and rust, corrosion, or sediment in water heaters. This is when you want a home warranty – to avoid having to pay thousands of dollars to replace something when the seller did not maintain the system properly.
Mistake #7: Not factoring in resale value
When purchasing a home, it is essential to consider the resale value. While it may not be the dream home, it is essential to find something that can build equity and appreciate over time. Making improvements to the home like new carpeting, hardwood floors, or granite countertops can increase its value. Additionally, in an up-and-coming area, with new shops and restaurants popping up, you can ensure that the price goes up over time.
In conclusion, millennials are buying their first homes, and while it is an exciting time, it can also be stressful. By avoiding these seven mistakes when purchasing a new home, millennials can have a smooth, successful homebuying process that sets them up for a bright future.