The 7-Point Millennial Prep Plan for Buying a Home
Tips for Becoming a First-Time Home Buyer
The statistics are sobering, if not staggering.
Since 1980, wages have grown by only 25%, while the median home value has risen 60%. Additionally, undergrad tuition rates have risen, leaving many recent college graduates with substantial debt.
Yet against this picture of skyrocketing housing prices and soaring student debt, millennials (ages 18-37) have asserted themselves as the largest share of home buyers, according to the National Association of Realtors.
Millennials may be the avocado-and-toast generation, but they are also proving quite adept at becoming homeowners.
How are they doing it, and more important, how can you do it?
It starts with planning. If you’re a recent college graduate, you know better than most that the future does arrive – and that hard work and preparation do pay off. You’re living proof.
So, don’t wait for things to happen, put your housing action plan in motion today. Here are seven steps to move you closer to your goal of homeownership:
1. Start Saving More
You’ll need money for a down payment, for closing costs, for taxes, for utilities, for an emergency fund for when the heater or AC goes out.
Cut the cable bill, cut back on the 24/7 online shopping, move back in with mom and dad (mom or dad), get a second or third job. Whatever you do, start banking bucks.
2. Clean up Your Credit
Your credit score will not only play a role in what interest rate you’ll pay on your loan, but some employers even look at your credit as the basis for their hiring decisions. Again, you need to be bringing in more money, not less, and that’s hard to do if no one will hire you. So try, try to pay every bill on time.
3. Lean into It
Start showing up at open houses. It doesn’t cost you a penny. The agent might even be serving cookies and punch. The point is, you have to educate yourself about the housing market, which will help you distinguish overpriced houses from underpriced ones. Plus, you’ll get a better idea of your housing likes and dislikes, your must-haves and your can-live-withouts.
4. Find a Real Estate Agent
After attending a few open houses, you might find you really like a certain agent. Tell that agent to start emailing you homes in your price range. Their knowledge of the home buying process, negotiating skills and familiarity with the areas you want to live in can be invaluable. Again, you’re leaning into it.
6. Talk to a Lender
Let them do the math and run some numbers. Don’t assume you can’t afford a home. Indeed, you may learn because of all the down payment assistance programs available that the monthly cost of owning a home is no more than renting. If you’re coming up short, a lender can give you a realistic number of how much money you need to have, which should re-invigorate your savings goal.
6. Redefine Your Hipster Attitude
Many urban cores are undergoing a renovation revolution. It’s hip again to live downtown, but it often comes at a hefty price. Therefore, consider keeping some sleepy suburbs on your radar, too. Many such burbs offer roomier housing options and superior school districts, factors that could loom large if parenting is in your future. Look for commuter-friendly suburbs being revitalized by light rail and other transportation extensions.
7. Get Skilled
However long you have to wait before you make your first serious bid to buy, put that time to good advantage by improving your home repair skills. Most hardware stores, especially large national chains like Home Depot and Lowe's, both host classes and workshops designed to help new homeowners get comfortable doing their own repairs without spending a ton of money on contractors or specialists.
Good things come to those who plan and prepare and remain actively patient, which means controlling the things that you can control while the market and economy do what they do.
Taking the above initiatives will put you at the doorstep of become a first-time home buyer. And that’s a great position to be in for when that door finally opens.