Hi gals. I am currently in my late 20s and have been renting (in a very expensive area) for the last five or so years. I consider myself very lucky to afford the luxury of living by myself and supporting myself in these troubled times for my generation. Most of my peers cannot afford renting (or the cost simply isn't worth it) and either still live with their parents or with roommates. However, I am getting to the point where I think I would like to buy a house. I just honestly have no idea where to start because I don't know anyone my age who has done it. I'm looking for basic tips and maybe some advice on how to determine if I can actually afford it. For example, if I'm looking at the "estimated monthly cost" on a website like zillow, how reliable is that really? Do I have to learn how to negotiate pricing or haggle when it comes to bidding? And, potentially, if i were to view a house, I have no idea what types of questions I should ask about it or what to look out for. I only know that my state requires a house inspection to be passed prior to signing any contracts, so there's that.
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Are you based in the US? My tips below are if you're based in the US. Also I'm not a realtor, it's very possible I'm missing something important, so please keep doing your research. I get it when you don't even know where to start though, so hopefully this novel of a post will help give you some direction.
You will work with 1) the realtor, who helps set up viewings, handles the paperwork, helps find you homes with what you want, and who communicates with the seller; and 2) the mortgage broker, assuming you're taking out a loan; this person usually works at a bank or a credit union and handles the loan approval.
If this is your first time buying a house, you could be eligible for a First Time Homebuyer Loan (FHA Loan). That is something to keep in mind. The big thing about this is that you can put a lower down-payment down, sometimes as little as 3%. There are pros and cons to this loan though. It would be something to ask the mortgage broker.
I found a lot of home-buying information from my local credit union, which had free home-buying seminars over Zoom. Those are super useful, I strongly recommend tuning in to one. Or just search for "Home Buying Seminar" in your area--sometimes community centers will have a presentation too. It's just good for information-gathering.
So usually the first step is to get approved for your loan. Credit unions also typically have better rates for mortgage loans. You'll typically want to get a mortgage quote from multiple places and pick the best one. Let's say, the broker says you're approved for $250,000. And maybe you have $50,000 in cash saved up as well to put towards the purchase.
Then, you contact a realtor and say "Hey, I'm looking to buy a house, my budget is $300,000." You tell them you want a three-bedroom house with a backyard and a bathroom with two sinks within a 50 miles radius of xyz city, or whatever it is that you want. The realtor then sends you listings, based on your preferences, and you go view them. You can also look things up yourself too on Zillow or Trulia or wherever and send them to the realtor to book a viewing.
So you view a bunch of houses and you find the house you love. You tell the realtor. They'll contact the seller. Sometimes, the seller is already in-progress with another buyer, but sometimes those fall through and you'll get your shot. So in this scenario, let's say you got your shot at the house you love.
Then, you get a shit ton of info about the house. They send you everything. They'll tell you if there was an oil spill at the gas station two miles away in 1994. There is also an appraisal, and the house inspection, and a pest inspection. Maybe some other things. You might need to pay for some these inspections, sometimes an extra couple hundred dollars. Probably depends on the area.
BE THERE FOR THE HOUSE INSPECTION. I had a friend who bought a condo and did not go in for the inspection. The inspector said everything was in order. Turns out the AC didn't work. Inspector swears it worked when he was there, but she was never able to get it to work. Had to pay a few thousand dollars to get it fixed. The inspection will (or should) tell you important things. Water damage here. This electrical outlet doesn't work. The AC doesn't work. The garbage disposal is broken. Etc.
So, you can tell your realtor, "Well, it'll cost $2,000 for repairs, so I want a $2,000 credit on the house." The realtor will talk to the seller about that. That's kind of how the negotiation side works. You won't be expected to do the negotiating, your realtor will negotiate for you, you just tell the realtor what you want.
And you might go back and forth. The seller might say "We'll only credit $1,000," and then you decide if that's ok or if you want to cancel the deal. You won't get reimbursed for the appraisal or inspection fees you paid though.
So you say cool, that's fine, I still want the house, so I'll take the $1,000 credit. Then you sign a godforsaken amount of paperwork.
Keep in mind, there are also closing costs. These can be something like an additional $5,000-$10,000, and that's just like...fees for closing out or some shit, I can't really remember. So you'll want that cash on hand.
Having a good realtor makes a big difference. I would suggest finding some realtors in your area and interview them, see if you vibe with any, and ask them all your questions. You could even tell them you're a first-time homebuyer and ask what you should be thinking about. Some realtors prefer to work with first-time homebuyers too.
Amazing overview of the process by Cat-Eyed Dancer. I will add, I was able to buy my house in my late 20s for three main reasons.
One, I moved from a very expensive city to a medium expensive city. So instead of getting a mediocre 1-bedroom condo for $700k, I could get a spacious house for $400k. However, if staying in the big city is your top priority, be prepared to live somewhere smaller and a condo/townhome.
Two, I worked hard in a career where I was well-paid (six figures). The easiest way to have money is to get paid a lot.
Three, I diligently saved and lived below my means. I had friends who were renting super fancy apartments and doing luxury travel. I enjoyed myself but in a very frugal way. The biggest hurdle of buying real estate is not the monthly payment, but having a down payment of anywhere from 3-20% of the purchase price.
These three steps meant that I had the demonstrated income and savings necessary to buy my house! 🏡
Good luck and keep pursuing this. Owning your own home is a huge achievement and way of securing a prosperous future!
Get a private mortgage broker if you don't want to trawl through everything - one who works for you and not a bank. It costs a few hundred, but it can save you thousands in getting the right mortgage.
Keep ALL the paperwork that the surveyor sends you. If after you've bought the property you find out that you were misinformed of something - and that something is expensive, you might be able to make a claim.
Be aware of where the house is situated. Every place will have different hazards to look out for. I live in Britain and there is much deforestation to create new residential zones, and we're pretty wet to begin with. New development zones are often at a risk of flooding, so I either look for a property on high ground or I look for really good insurance.
You can change much about your house but not the location. Location location location!
There are some really amazing and helpful comments here. I’m also a renter but waiting to buy a house due to market conditions in the US. Interest rates are astronomical—currently sitting at around 7% on average for a 30 year mortgage. Assuming you will take on a mortgage, it’s important to consider how much you will pay over the life of that loan. Of course, you can always refinance when rates are lower. But do not pay more than a property is worth just because you want to beat out other buyers.
It’s a seller’s market right now, although the latest reports show that home purchases have been steadily slowing down for the last few months. Hopefully we will enter into a buyer’s market sooner rather than later.
Wishing you all the best of luck when you decide to pull the trigger! Buying a home is a huge accomplishment especially as a single woman. 😊
If you were in Australia, I’d suggest buying at least one investment property to rent out and then use that as equity to buy what you want to live in.