The younger generation is well-aware of the benefits of renting. Limited responsibilities, and the freedom to pick up and move at a moment’s notice go hand in hand with the nomadic lifestyle and the delayed adulthood of the millennial generation. However, owning a home also has its benefits. Apart from the pride of ownership and belonging to a community, there are palpable financial and tax incentives to owning a home. Here are five considerations for people who are buying a home for the first time.
Find a realtor
While you can find tons of useful information on the Internet, they are hardly a match for years of live market experience. Having a professional real estate agent on your team can help you sort out what’s important, and rest assured, these people know which questions to ask and what to look for. Not only do they have access to valuable pricing information but can also rely on a long string of connections with home inspectors, lenders, and attorneys. A good realtor is more of a consultant than a salesperson. If you feel that you’re being hawked into buying anything at all cost, it’s better to move along.
Choose the right one
You can ask your friends and family for recommendations, but make sure you ask the follow-up questions, like if they worked with them personally, how much experience they have and if they did a good job. Unfortunately, there are not many hoops one needs to jump through to become a real-estate agent, so the market is brimming with part-time and inexperienced professionals, who might be honest, but have little experience in the industry. Just because you know people who know people doesn’t mean they’ll do a great job.
Plan your budget
You’ve saved for a stunning holiday, new wardrobe or a sleek used car, but when you decide to purchase a property, you reach the boss level of all saving goals – the home loan deposit. It’s generally considered that the minimum deposit for home loans should be at 20% of the purchase price. You may already have a budget in place, but if not, it’s time to review your saving strategy. Audit all your current expenses and identify the opportunities to trim the fat. Your home-buying budget needs to work for you well after you move in.
Get the papers in line
When applying for a mortgage, you need to present the proof of your income and tax report. Mortgage lenders usually ask for two recent pay stubs, W-2s from the previous two years, tax returns and bank statements from the past two months. They need every page of the statements, including the blank ones. This way, they can make sure you have sufficient funds or don’t have odd money coming in or out. Having all the necessary papers in order can save you time.
A few takes on location
For most people, their first home is not going to be their permanent residence. When scouting a location, the best course you can take is to see it as an investment, even if you’ll be living there. Unless space is your biggest concern, an inner city apartment is perfect for your first property. Aside from the building and internal features, consider the local schools, amenities, and transport routes. If there is a significant housing or commercial development in the area, your real-estate investment has a bright future.
Home ownership is a form of saving which lets you build on equity and net worth with upgrades and improvements. With today’s low interest rates, your buying power is probably stronger than it will be in the future, and rest assured, they will keep going up, just like the rent payments.