~ Let me know if you find this informative, or if brings more questions to mind than answers. And from my own personal experience the biggest was the adjustment financially and in my life. ~
I’m a millennial who just bought their first house — here’s everything you need to know before making the purchase
A little over three years ago, my now-fiancé and I decided that, after five years of dating, we were ready to take our relationship to the next level and move in together. That would have been relatively easy if we were willing to move into an apartment — but we were set on buying a house together, a considerably larger investment and decision, especially where we’re from on Long Island.
We spent a long time looking into our finances, budgeting, saving money, looking at places, learning real estate terms, and getting advice before making the move towards actually buying a house. Once we did, though, it catapulted us into an intense experience where we learned a lot.
As two millennials buying a house together, we faced a lot of criticism. Many family members and friends were wary of our decision, the internet warned against it as a whole, and even real estate agents registered a look of surprise when they first saw us.
There are a lot of myths about millennials out there that make it seem like none of us are interested in making the investment in a home. In reality, recent studies have found that millennials are buying a lot more homes than you think. Data shows that homeownership rate among households headed by someone under age 35 increased the most of any age group in 2017. And millennials are changing the real estate market because we’re looking for different things than the generation before us. In other words, my fiancé and I certainly weren’t the only ones in our age group going from living in our parents’ house to buying our own.
Still, buying a home is a serious decision that can be overwhelming, stressful, but ultimately, very rewarding — here’s what I learned throughout the process.
Yes, it really is that expensive.
When you think of buying a house, you probably think about money. I’m here to tell you that it really is as expensive as you think it is. My fiancé and I saved together for a year before we even started thinking about talking to a real estate agent, and he had been saving long before me. Even so, the amount we had to put down, plus a glance at our future monthly payments, was very anxiety-inducing.
I also learned that there is always something that comes up that makes things even pricier. For example, on our closing day, just when we thought we were finished writing checks, it was revealed that the previous homeowner hadn’t paid a huge bill for the house that we now had to take care of. It was another couple of thousand dollars on top of everything else that we weren’t expecting.
The process of buying a house is expensive, of course, but what’s more expensive is actually owning a home. Aside from mortgage payments, you suddenly get bills for absolutely everything you can think of. And if you’re budgeting, you have to consider all of the little things that come up constantly, like something big breaking (within the first few weeks in our new home, it was apparent that we needed to replace our hot water heater pretty quickly).
I expected that buying and owning a house would be expensive. But still, it’s jarring to watch all of your money fly out of your bank account and into the upkeep of your home, and it’s hard to prepare for that.
It’s easy to get taken advantage of.
Before getting into the buying process, my fiancé and I were wary about falling into a trap that would leave us in serious debt later on. We had recently seen “The Big Short,” which is about the financial crisis in 2007 brought on by the United States housing bubble, and we were thoroughly freaked out.
Although we were assured by some people that things weren’t like that anymore and that there were laws to keep those things from happening, we still experienced a few suspect situations. We spoke with a few people from different banks, and all but one of them encouraged us to sign up for a no money down home loan. While this isn’t the worst idea in the world, it also isn’t the best, and in the long run, it might benefit the bank more than it benefits you. According to US News, the advantages of a down payment include lower borrowing costs and lower interest rates. The lower your down payment, the more a lender considers you a risk — and they give you worse rates because of that. So, while you might save money by not putting anything down, you’re going to lose money in the end.
If we didn’t do our own research, we easily could have been talked into that trap from some very persuasive lenders. So, the big lesson: banks care more about themselves than you.
Real estate photos are not to be trusted.
It’s 2018, so you begin looking for a house by looking online. Real estate sites include lots of photos of houses that are for sale, but you’ll quickly notice that you cannot trust them, ever. Photos can be tricky! Wide angles can make rooms look bigger, editing can make everything look more sparkly and brand new, and a good cleaning can do wonders.
All of that is to say that you shouldn’t rely on the photos. Go look at the house in person even if you aren’t into it online. There were homes online I absolutely loved, but when I saw them in person, they weren’t nearly as nice, or they were considerably smaller. The house I ended up buying actually had terrible photos online. Their decor was very old-fashioned and the photos were really bad quality. However, when I got there, I fell in love and found that the photos did the home no justice. So, listen: I know that, as a millennial, we are drawn to aesthetically pleasing homes and decor, but please remember that you can change the way the house looks.
Once the process begins, things happen quickly.
Buying a house is a strange process. At first, it’s kind of slow. You spend a lot of time looking for the perfect home, and you see a lot of awful options along the way. You get discouraged and wonder if you should either settle for something you don’t love or find a way to get more money to buy something better.
Then, all of the sudden, you find a house you want. Suddenly, things are moving very fast. You have to make an offer, quickly, then you have to negotiate. Then you have to get all of your various affairs in order to lock down that house before the owners get a better deal and decide to go with someone else.
It’s a big financial adjustment.
Owning a house is not just expensive, it’s a completely different financial situation, and it’s hard to prepare for. Getting a down payment out of the way and figuring out your mortgage rate is only the beginning. A house comes with many bills along with so many other little financial burdens that pop up constantly.
Even if you’re good with money, adjusting to that difference can be overwhelming, which is especially true if you didn’t live on your own previously. Personally, I had to make a huge change in the way I spent and saved money, and I came very close to getting myself in a terrible situation. It wasn’t easy and took about a year to get into the rhythm of things.
Actually, it’s a huge life adjustment.
Aside from all of the money you have to spend, owning a house is a lot of work. It’s not like renting an apartment, where if something big goes wrong, you can call a super or a landlord and have them take care of it. You have to take care of it. You have to be the adult and do everything.
The reactions from others can be… interesting.
As a millennial buying a house, you’re going to get some strange reactions from other people. My fiancé and I had a lot of people telling us that buying a house was a bad decision that would just be a money pit in this economy. But in the end, you have to just remember what’s best for you and filter out the rest.