Hello. I graduated from college two years ago and I think is time to buy a house. What are some tips when buying a house? Or mistakes to avoid when you’re young?
I’m on my mid-20s. I’m trying to learn as much as I can online and a real estate is helping me to make tours together. I was able to save $15k for the down payment and I got pre-approved for a loan of $200k with 6.5% interest rate in 30 years. Most of the houses I see on my city in Texas are around $200k - $300k. I don’t want a big house but I want at least a house in good conditions Do you recommend to keep looking for houses or wait until the market house go down a little bit this year?
I’m renting an apartment and it really sucks. I recently moved to a new place and I don’t really like where I live (the apartment). I like my new job and I think I’l stay with them. I’m hoping to move out after my lease is over.
Thank you.
A little more info about my situation: I don’t have any debt. I was able to pay off my student loans last year. It wasn’t a lot but I was putting $1000 a month to get rid of my student loan. I don’t have any car payments either. I live in a small town and I have a decent job as a civil engineer.
The only thing that is pushing me away to buy a house is the down payment. I read only that good down payment is 20%. A average house cost $200,000, so my down payment should be $40,000. I feel like it’s a lot of money. I could probably save that in 2 years, maybe in by the end of 2025. I’ll keep looking for a house under $200k. Hopefully this year will help me to manage my money better and find a good house in my area.
Thank you so much for all the replies.
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Buying your first home in you mid-20’s, what you need to remember is that you aren’t going to get what your parents had when you left them at 18 years old. They took time to build into that home, or they moved to an area where homes were not built up yet and purchased at a discount because they foresaw something coming. That means having to move farther out of town to get something nicer/fancier.
You’re looking for a starter home, which does not necessarily mean it has to have great schools. You’re single with no kids. You have no reason to need a great school district. The flip side is that when you sell the home, you will be giving a discount, comparatively, because the schools aren’t great but you are probably selling to someone else looking for a starter home and not a forever home.
Don’t be afraid of not having the perfect layout or the cleanest landscape. While the footprint of the home is the hardest part to change of a home, if you get a discount because the home isn’t the greatest layout, you may have to give that same discount when selling but you could still see growth in the value of the home. Same with landscaping and maybe some labor intensive interior repairs. This is a starter home, and a great place to learn how to use your hands and tools to create value in the home. Instead of paying someone to do the work, you can create value by doing renovations on your own, or possibly paying someone on the side to help teach you. Things like replacing kitchen cabinets with new cabinets and a formica countertop are probably easier than you expect. Again, you’re in a starter home and the next owners are in a starter home. There’s no real reason that you need to have the top of the line everything in this home.
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I’m not much older than you at 31. Back end of millennial. I have that mind set from SC. There are still affordable homes under 250k around you just gotta adjust your location. Can’t afford to live 20 mins from downtown anymore. Certain states that are less desirable to the masses didn’t see these massive run ups (South Carolina). There’s options and it’s absolutely harder but possible.
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We bought in 2021 at 27 years old as FTHB. We bought conservatively (425k in north east for a 3bd 2ba).
We’ve learned a LOT about homes, how to take care of them, what we do and don’t like. I would recommend the “starter home” approach if you can.
We are also now having kids and our needs are a bit larger, so it’s a natural progression.
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The future is never guaranteed for sure, but as long as you plan on staying in one place that’s as good as anyone can do. If you do buy, try to buy small and cheap. Small means less things to break and cheaper prices when doing things like a roof or flooring, and cheap means you can save more to fix as you go. As for extra income, try to budget and think about your careers trajectory. The one thing you don’t want to do is buy a home that requires you to work two jobs to afford. Having a side hustle or second job is great for spending money or growing your savings quickly but you don’t want to rely on it to pay the bills.
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I bought my first house in 2021 when I was 24, and was lucky enough to be a mortgage processor for a community bank at the time so my perspective is a bit unique. Here’s what I learned:
Don’t use a realtor to find your lender. Research local loan programs and offerings as independently as able. Everyone in real estate (including your loan officer) gets paid via commission, so the number one thing they care about is getting you to the closing table, and that might not be with the best loan terms available but rather, the most likely to get through an underwriting process (often times FHA loans, there’s better options). Get pre-approved before you even start interviewing real estate agents so you know how much you can afford. There are so many down payment assistance options in each state. Inquire about them!
Now for me personally, I got a multi family house as a first home and now recommend it to everyone. It helped me get qualified for a bigger loan since they counted my future rents into my income ratios, AND I pay less than I would for a traditional single family home since my mortgage is supplemented by my tenants rent. Another perk to multifamily first homes is that if you want to keep them and buy your next home, they are more likely to turn a profit with multiple units rented and now you have a house and a side hustle… Oh and the tax benefits of a multi family is much greater. You can “depreciate” the part of the house you’re renting out to get money off of your tax bill. There are just lots of benefits all around if you can see yourself as a live-in landlord and have the patience for that.
2024 specific tip: ask for seller credits towards loan costs such as rate buy downs rather than dropping the offer amount. In most cases it will save you way more long-term because it drops your mortgage payment more than having a lower purchase price would.
Best of luck!
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Regardless of when, do your research into your inspector, make sure you know what they do and don’t inspect, that they will do a walkthrough with you to explain any issues, if there is anything of concern ask questions, shop homeowners insurance to make sure that your potential home can be covered, avoid HOAs unless you can stomach them, and visit the home at different times to see what traffic and noise are like.
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You’ll have plenty of time to buy a house in the future."
That’s BS, I’m sorry. Prices will only go up, life will get harder, you only have more responsibility. If I could have bought something in my early 20’s, I’d be set for life. Instead, I rented and rented and struggled to buy in my mid-30’s. This is terrible advice.