Many millennials dream of homeownership to build equity and invest in their family’s future. But the dream of owning a home can turn gloomy when buyers enter the market unprepared. One survey of over 1400 homeowners suggests that nearly two-thirds of millennials have at least one regret about purchasing their current home. The good news is that millennials can avoid many of these regrets by learning some essential facts before looking for a new home:
Unanticipated Costs Add Up
Not surprisingly, the most common regret for millennials about purchasing their homes has to do with costs. While new homebuyers are usually ready to pay a deposit, down payment, and mortgage, they’re sometimes taken aback by various fees and taxes that can quickly add up. Additionally, renters-turned-homeowners typically underestimate sizable upkeep costs like maintenance, repair, and landscaping.
Real estate thought leader Regan Mcgee told Yahoo Finance Canada that clarity is key for millennial homebuyers, “Millennials should be clear on the full cost of the entire process before they start shopping for a home, including budgeting for ‘unexpected’ costs and having a clear understanding of commission fees.”
You Can Reduce Mortgage Rates
Another regret for millennials is not getting the best mortgage rates. By the time they realize that the rate is too high, they’re already locked in for up to 10 years. Some factors in calculating a mortgage rate, like the state of the economy and national policy interest rates, are out of a buyer’s control. Still, buyers can manipulate other metrics in advance of buying a home. Creditors examine these metrics to determine the risk of lending to a homebuyer — the higher the risk, the lower the mortgage rate.
The best place to start is the credit score. Experts say that the golden number is 750 or above, as it shows lenders that a mortgage applicant repays their debts on time. Typical ways to boost a credit score are raising credit limits, increasing income, and paying down debts. Decreasing debt can also make the debt-to-income ratio healthier, earning a borrower more favorable rates.
Another way to reduce mortgage rates is to save up a larger down payment and apply for short-term loans instead of longer-term loans. Finally, shopping around and comparing rates and terms from different lenders is also wise.
Top Real Estate Agents Make House Hunting Easy
A friendly, honest, experienced, and responsive agent can help millennials find their dream homes without any unpleasant surprises down the road. Looking for a top real estate agent means checking their credentials, looking up client references, and checking reviews on marketplaces such as Nobul, where reviews are verified.
Some millennials do themselves a disservice by hiring the first real estate agent they meet instead of shopping around because they feel obligated after sharing their contact information. Well, there is no such pressure on Nobul, where homebuyers can reach out to agents all they want without offering any private information.
Location is Critical
Buying a home is about making compromises nowadays, and millennials are looking beyond first-choice locations to afford larger homes. However, many have regrets because such properties are further away from work, school and located in less developed neighborhoods. Homebuyers should think twice about the challenges of living in more remote locations, even if the prices are more attractive.
Millennials should listen to their hearts and minds when shopping for homes. Jumping into a transaction without sufficient research, credit, or savings is usually not a good idea.