At one point or another, you’re going to think about buying your first piece of real estate.
Do you have enough cash to cover the 20% downpayment on a property? Perhaps you need to borrow some money from your parents?
While your parents might be able to help you out, there are numerous other options out there for you to explore. It’s important to do your research and not rush into anything you can’t handle financially.
Here are five mistakes millennials make when buying real estate.
Putting all your money into a downpayment
You might want to think this through first. It might be very tempting to put all your money into a downpayment, but it could come back to haunt you.
Being still relatively young, there’s still a lot that can change in your life. Whether you get a divorce or lose you job, these monthly payments will be very challenging to handle.
Instead, slowly save up on the side and set aside 6 to 12 months of living expenses in an emergency fund.
Rushing to buy a smaller property
Sometimes you just need to be patient. You might think you’re not going to have kids and have a family for a while, but you need to think long-term. Buying a condo and hoping it goes up in value is a risky game to play.
Not hiring a realtor
You might get super excited about buying your first place and think you know everything there is about real estate. Unfortunately, you’re wrong.
Find a good realtor who can assess your full situation and is able to go into negotiations with all the knowledge they need. Without an agent, you’ll be contacting the seller agent directly, who might take advantage of your solo house hunt.
Borrowing more than you can afford
Up to this point in your life, you’ve probably had to worry about much smaller bills. Things such as gas, phone bills and groceries. Now, you’re making a big jump and will need to pay a mortgage. It’s not just any other bill - it’s a huge commitment that has a lot of hidden costs attached to it. There’s property taxes, repair costs and numerous other costs that can land in your face.
Only focus on how much you should borrow and not how much you can borrow from the bank. Banks will lend you a large amount of money and you’ll soon realize that it’s just a business for them.
Not attending the home inspection
This is one of the biggest mistakes you can make. It’s absolutely crucial that you attend the home inspection and see what comes up. You want to be as involved as possible and make sure the home inspector you hire is properly vetted.
There’s a lot that is decided based on a home inspection. You find out about repairs, the land the house sits on, previous issues. As you go through a home inspection, some hidden issues that the seller did not disclose earlier may pop up and you can even renegotiate the selling price if that is needed.