The home buying process is fairly straightforward for all generations, but can be daunting when you approach it for the first time. Today's first-time buyers are likely Millennials (Generation Y) - generally identified as people born from 1981 to 1996 (aged 27-42 in 2023). This group is the first to grow up in the internet age and is very comfortable with technology. Millennials will enjoy exploring homes for sale in the Greater Boston area by easily navigating Barrett Sotheby’s International Realty's site.
But buying a home is more than just looking at all the pretty digital pictures and experiencing virtual 3D property tours. There is paperwork to consider. There is financing to consider. There are inspections to schedule. There are important questions to ask specifically about the local market. Money will be spent, and it’s important to spend both within your means and at the best possible rates (when applying for a mortgage). The entire process is made clear and simple when you partner with one of our real estate agents.
Here are some valuable home buying tips for first-time buyers, which will help to protect your hard-earned money both in the short term and in the long term.
Finances (saving up for a sunny day)
Student Loan Repayment: The cost of obtaining a degree decades ago was more manageable for past generations. Millennials have been faced with high student loan repayments. And while borrowers wait anxiously for good news about the guidelines for income-based student loan forgiveness to come to fruition, it’s important to make your monthly payments in a timely fashion. First time homebuyers generally need to apply for a mortgage to finance a home purchase. Paying your bills on time will help you maintain a favorable credit score. With a higher score, you will qualify for a mortgage with better terms and better interest rates. You will pay less for the home over time.
Save for a Down Payment: Having 20% on hand for a downpayment is great, but it isn’t necessary. First time home buyers can qualify for conventional loans for just 3% down and FHA loans are available for 3.5%-10% down depending on your credit score (keep paying your bills on time). The advantage of starting out with a bigger down payment is simple. You won’t be borrowing as much to pay back, you will pay less in interest over time and your monthly payments will be smaller.
Budget: You’ll want to consider your monthly budget before applying for a mortgage pre-approval. Do the math. You’ll need to factor in your current monthly expenses. Include a figure for a down payment, mortgage payment, an increase in utilities, property taxes, and homeowners insurance. You will also need to estimate closing costs, which are different from the down payment. Closing costs typically range from 3%-6% (the closing costs for a $300,000 home will range from $9,000-$18,000).
Financing (shop around)
Get Pre-Approved for a Mortgage: When you are comfortable with your budget you will know what you can afford in a mortgage payment. Contact lenders and apply for pre-approval. This is important. Real estate agents (buyer’s agents and seller’s agents) will take you seriously when you have obtained pre-approval.
Shop Around for a Mortgage: Take a close look at the lending trees. Don’t pick the first apple you see. Not all apples are the same: you need to shop around for a mortgage. You want to find the best mortgage deal you qualify for.
Work with a Realtor
Hire a Buyer’s Agent: There are many costs involved with purchasing a home. Working with a buyer’s agent is not typically one of those costs that fall on the shoulder of the buyer. The brokerage fees paid to both the buyer’s agent and the seller’s agent are normally paid by the seller.
A buyer’s agent will help you with the home buying process: finding your perfect home, drafting a formal offer (with respect to the local market, so you don’t pay too much), navigating home inspections, answering all your questions regarding legal paperwork and representing you on the negotiation table (to get you the lowest possible price). There is a lot of information to handle during real estate transactions. Choose your agent wisely.
You’ve worked hard to earn your degree, master your craft and earn your money. You’ve saved money for the down payment and closing costs. You’ve paid your bills on time. You’ve built up a good credit score. Protect your money by working with a trusted agent. A buyer’s agent will work in your best interest when buying the home of your dreams in Greater Boston. They will be representing you. They will work with you to make a good offer with respect to the local market and follow up with an informed strategy on the negotiation table to save you money.
Barrett Sotheby’s International Realty has been working with buyers at every price point in Greater Boston and surrounding areas for 50 years. We look forward to helping you navigate the home buying process and find your perfect home. Contact our team today!