Home Buying for Young Professionals

Apr 29, 2014

As a young professional, you might be thinking about buying your first home. Whether that's a single family home, a multi-family or a condo, there are a lot of things to think about. HYPEsters Nolan, Kristyn and Suzanne have put together some tips for home buying. This is certainly not the definitive guide, but it should help you get started. For a first-time home buyer, there are A LOT of steps from thinking "I want to be a homeowner" to getting the keys.

The first thing you'll want to think about is your finances

Budget
- The first thing to figure out is how much you would be comfortable spending on a home or condo. Talk with your financial adviser about how much money you have, how much you make and how much should be put towards a home.

Get Pre-Qualified - When first looking at banks for your mortgage loan, you will work towards pre-qualification.  This will give you some buying power, but getting pre-qualified for a home loan will make your offer that much stronger. This typically happens after you have a contract with a real estate agent in the mid-process of your mortgage financing. At this point you'll be required to divulge all of your financial information. This can be a very personal process as the banks will be reviewing both your employment history and your financial history. There are many new regulations that have been put in place since the 2008 real estate crash designed to protect the home-buyer, so be prepared to answer a few questions about your finances.

Taxes and Insurance - Don't forget to include taxes and insurance when you're thinking about how much you'd be willing to spend per month on a mortgage. Banks won't talk about these values as they differ from town to town.  Make sure when looking at insurance, you think of it differently than, say, health insurance.  You want homeowners insurance for those catastrophic events, versus preventative/maintenance tasks. 

The Joys of Homeownership - <Insert sarcasm here> While owning a home can be rewarding, you should also think about the unexpected. What happens when your furnace dies? What happens when the roof starts leaking? How will you pay for it? Also think about clearing snow and ice on your potential sidewalk and driveway, if you'll have an oil furnace (and need oil deliveries) and the other responsibilities that come with being a homeowner.

Once you have your finances in order, think about what kind of home you'd like. What neighborhood you want to live in, a fixer-upper versus move-in ready, what the schools are like if you're planning to have kids eventually.

Best Bang for your Buck - If you're buying your first home, you're probably not buying your dream home. Think about buying the "worst home" in a great neighborhood. It will probably have a lot of potential, and make it easier for you to sell when you're ready to move.

Know Your Skills - If you're not a handy person, and don't have a lot of money to spend on contractors, don't buy a fixer-upper. But if you do buy a house that needs work, keep this in mind - the rooms you want to have in the best condition are the kitchen and bathrooms.  However, they don't have to be perfect - a little bit of paint, new handles/knobs, and updated lighting can go a long way and don't require experience.  If you're a little more adventurous and want to get your hands dirty, there are tons of DIY books/websites out there - sheetrocking and tiling are just a couple of skills you can learn without needing permits or a contractor.

Future Thinking - Most mortgages require a 30-year commitment. That's a long time! Just something to keep in mind.  The average length of time most people live in a home is 7 years, so you want to make sure that you a) have room to grow and b) will be able to sell when you're ready to move on.

Neighborhood - Two things to think about here. The first is to think about the school system if you intend to live in that house when you have kids and they become school aged. Pick a neighborhood with schools that you're comfortable with. The other thing to think about is how the neighborhood affects re-sale value. If the home is surrounded by homes that need work, that will hurt your re-sale, but if it's a nice neighborhood (and you spend a bit more for the home) that will make it easier to sell later on.

So you've got your finances straightened out and you've got some ideas on what kind of home you'd like. Time to find an agent to help you with your home search!

Expectations - From the start, lay out all of your expectations for the process with your agent so they know exactly where you stand and what you want.

Knowledgeable - Look for an agent who is super knowledgeable about the area you are looking in. You'll be more likely to find a home you love when you have an agent who knows what you want, and knows a lot about the homes in the area you want to live in.

Personable - Buying a home isn't just a business transaction, it's an emotional one too. Find an agent that you connect with, that you trust and who you like. They are going to help you take the next step, and you want someone that's going to be there for you.

Dual Representation - When you sign a contract with an agent, you're really signing on with the real estate broker. If that agent leaves the broker, you're still under contract with the broker; you don't get to move with the agent to their new firm.  So, if you want to make an offer on a house that is listed with your broker, you'll have to sign a dual representation agreement. The agreement states you understand that the broker (not the agent) is representing both the buyer and the seller in the transaction. This isn't necessarily bad, but just make sure it's something that your comfortable with. You don't want to question if the agent was really working in your best interest on one of the biggest purchases you'll make in your lifetime. 

Hopefully this helps you get started or at least thinking about what goes into buying a home! Make sure that during this process, you take your time. You should start preparing long before you start looking; pay off your big debt, clean up your finances and save for a down payment. Don't settle for something that's just good enough, find something you love. Good luck!

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