Every generation has made mistakes when it comes to buying a home. Some boomers failed to consider their retirement needs when buying their forever homes, while some Gen X’ers relied too much on inheriting their boomer parents’ homes that they paid little heed to their future housing needs. However, it’s the millennial generation that seems to have the hardest time buying a home and are making the same mistakes that their parents did—plus a few new ones.
Even with the odds seemingly stacked against them (mounds of student debt and a housing crisis), millennials are gradually entering the housing market looking to buy their first homes. Averaging at around 34 years old, first-time millennial homebuyers are finally becoming the biggest cohort in the real estate market.
If you are part of this generation and are already seriously thinking of buying a home, here are the mistakes you need to avoid as you go along:
1. Not doing due diligence
The number one mistake you can make as a homebuyer (or a seller, at that) is not doing due diligence. The process of buying a home is often a complicated one with a lot of hoops to jump through, making it often more tedious than it has to be. Thus, failure to prepare will likely set you off on the wrong foot, possibly even putting a few losses in your way.
Thankfully, there are countless ways you can prepare to buy a home. For one, there is a multitude of online resources that you can use to familiarize yourself with the process of applying for a mortgage, looking for a house, closing on a home, etc. Many apps for real estate buyers can help you look for the perfect home, even without the help of a real estate agent. There are plenty of resources; all that’s left is for you to use them.
2. Not saving enough money before buying
Failure to save enough money for a good down payment (generally at least 20%) is one thing; failing to save money for expenses after the purchase is another. When buying a home, you need to have enough funds for the down payment, closing costs, home insurance, maintenance, utilities, as well as your emergency fund.
Many millennials are too eager to buy a home, so much so that they push through with the purchase with a too-small down payment and a nonexistent financial safety net. However, the less you put down on a house, the more you will pay in interest and the longer the loan life will tend to be. Furthermore, there are a lot more expenses that come with homeownership than the mortgage payments—there’s also maintenance, bills, repairs, and, of course—other basic needs.
With that in mind, it’s better to save up as much money as you can for the down payment and post-purchase expenses before buying a home. This is especially true if you also have student debt to pay and are thinking of starting a family (or have already started one)
3. Taking the home inspection lightly
A home inspection is an extremely important step in the homebuying process. It will tell you all you need to know about the house in terms of repairs, required maintenance, and potential repairs in the future. For example, a home inspection will tell you if the house you’re eyeing has hidden mold problems, plumbing issues, potential structural issues, thereby helping you choose the right house
When you get a home inspection done, the inspector will provide you with a full report of what they have found. You can peruse this report all you want, but it’s always better to attend the inspection as well. This way, you can see first-hand what you will be dealing with if and when you decide to buy the home.
4. Buying a house that is too big or small
Buying a house that is too big can be just as bad as buying one that is too small. If you buy a house that has more room than you need, you could be paying an unnecessary amount of money for space that you are not even using. In contrast, when you buy a house that’s too small, space issues will pop up sooner or later.
Pro tip: determine your priorities before buying a home. Do you plan to have kids? If so, how many? Are your parents going to move in with you eventually? Do you want to have a home office or a hobby room? By figuring out your future plans, it will be easier for you to do determine how big of a house you need.
Millennials are now the biggest cohort of home buyers as most of the oldest ones are starting to buy their first homes. If you think that you’re ready to buy a home, be sure to avoid these mistakes in order to protect your investment and, of course, your future.